Tesla shares drop on disappointing quarterly performance

Model 3					Tesla adjusts Model 3 prices amid lowered $3,750 federal tax credit

Tesla also said it boosted production during the quarter, churning out 86,500 vehicles, up from 80,142 during the third quarter.

Tesla Banks on Model 3 Production ImprovementsLos Angeles, USA - November 30, 2017: Tesla Model 3 on display during LA Auto Show at the Los Angeles Convention Center.

The company also fell just short of its promise to deliver 100,000 Model S and Model X vehicles during the year.

The electric vehicle maker's shares fell by more than 9 percent in morning trading. That included 63,150 deliveries of its mass-market sedan, the Model 3. Tesla said it delivered 90,700 vehicles from October through December.

Starting Wednesday, the company will be reducing its price for Model S, Model X and Model 3 vehicles in the U.S.by $2,000 (£1,585), it said.

The company's deliveries for the full year matched Wall Street estimates, but its figures for the fourth quarter fell short.

Compounding investor anxiety was the company's announcement that it would slash prices on all Tesla models by $2,000, with the price cut meant to offset a reduced federal tax credit that took effect on Tuesday.

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Musk now plans to turn attention to filling Model 3 orders in Europe and China starting in February, which could help offset some of the potential drop in USA demand linked to the shrinking tax credit. This is despite the electric vehicle maker only producing mid and high-priced variants for the Model 3, and deliveries only being exclusive to North America.

Tesla Inc. plunged after mildly disappointing Model 3 deliveries and an across-the-lineup price cut prompted concerns that the carmaker may bump up against a ceiling for demand.

Tesla shares fell as much as 9.7 per cent to US$300.52 as of 9:36 a.m. Wednesday in NY.

"The price cut is what's driving the stock lower, as it openly acknowledges the sunset of subsidy dollars is a material headwind", Craig Irwin, an analyst with Roth Capital Partners.

Although the delivery numbers were 2,000 fewer than expected in a FactSet survey of analysts, Wedbush Securities analyst Dan Ives told CNBC they were consistent with his prediction.

Tesla shares saw a sharp decline on Wednesday morning.

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