In its quarterly Form 10-Q filing with the U.S. Securities and Exchange Commission (SEC) Tuesday, Tesla Inc.l (NASDAQ: TSLA) reported U.S. sales in the third quarter fell by $2 billion year over year to $3.13 billion. The company delivered more than 97,000 vehicles to customers during the quarter.
Sales in China rose by $260 million to $669 million in the quarter while sales in the Netherlands rose 56% to $427 million and sales in Norway were up about 10% to $253 million, but a U.S. sales decline of 39% was too large to overcome. Total sales fell by $521 million year over year to $6.3 billion, including $402 million in Tesla’s storage and energy generation segment.
The U.S. sales decline was attributed to “price adjustments [Tesla] made to [its] vehicle offerings” in the first nine months of the year. The company was referring to the halving of the federal tax incentive from $7,500 for a buyer of an all-electric vehicle to $3,750 through the first six months of the year and the halving again that will drop the incentive to $1,875 for the second half before disappearing altogether on January 1, 2020.
To take some of the sting out of those reductions, Tesla lowered its selling price on its popular Model 3 sedan.
The drop in U.S. sales was partially offset by lower costs that Tesla attributed to manufacturing efficiencies and lower prices negotiated with some suppliers. Bloomberg News sought a comment from Tesla’s battery cell supplier, Panasonic, but did not receive one.
Regarding the phase-out of the federal incentive, Tesla said it believed that the “phase-out has likely pulled forward some vehicle demand into the periods preceding each reduction, and we may see similar pull-forwards through the remainder of 2019. In the long run, we do not expect a meaningful impact to our sales in the U.S., as we believe that each of our vehicle models offers a compelling proposition even without incentives.”
Investors have not been so sanguine, shaving 3.3% off the share price Tuesday afternoon. The stock traded at $316.89 in a 52-week range of $176.99 to $379.49. The 12-month consensus price target for the shares is $261.40.