Tesla Falls After Report Raises Questions on Car Demand

Tesla Motors Inc.’s stock fell after a report said the company is selling fewer of its electric cars and offering new incentives.

Tesla dropped 5.8 percent to $221.67 at the close in New York after the Wall Street Journal, citing another media outlet, sent a headline noting a decline in car sales that it later clarified. A Credit Suisse AG analyst described the report as “misleading.” Tesla’s slide, the steepest since Oct. 10, pared the Palo Alto, California-based company’s gain for the year to 47 percent.

Earlier the Journal’s headline said Tesla sales fell 26 percent, citing WardsAuto.com. A later report clarified that the decline related only to U.S. sales. Tesla began shipping vehicles to markets in Europe and Asia this year, reducing availability of the cars in the U.S. The company plans to build a factory in Nevada to boost battery supply as it targets a 100,000-unit vehicle production pace late next year.

The Wall Street Journal also said that Tesla is offering “two new sales incentives,” referring to the company’s new lease offer, which Chief Executive Officer Elon Musk wrote about in a company blog post Oct. 25. He said that a new lease offer through U.S. Bancorp will lower monthly payments by 25 percent. Musk also wrote that dissatisfied customers can return their leased car within 90 days and have their obligation waived.

‘Too Misleading’

The Wall Street Journal article was “too misleading to ignore,” wrote Credit Suisse analyst Daniel Galves in an investor note release this afternoon.

It’s “no surprise” that Tesla’s U.S. sales would be down year-over-year since the electric-car maker only recently entered the European and Asian markets and had to meet demand in those regions.

The U.S. Bancorp lease is “not an incentive” and is 25 percent lower because the banking company “has a lower cost of funding and is likely taking a less conservative view on residual value,” according to the note.

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