Tesla Inc.'s (TSLA) fourth-quarter earnings fell short of analysts' expectations as repeated price reductions squeezed margins. Tesla shares were down about 3% in after-hours trading following the quarterly report from the electric vehicle maker.

Tesla reported operating income of $2.06 billion, down 47% from a year ago and below❀ the $2.23 billion expected by analysts. Diluted earnings per share came in at 71 cents, also below the consensus view compiled by Visible Alpha.

Fourth quarter revenue was up 3% from a year ago at $25.17 billion but came in slightly worse than analysts had expected.

Key Metric

Tesla CEO Elon Musk's strategy of price cuts to boost sales volume has put pressure on the company's margins. With fourth-quarter deliveries of 484,507, Tesla met its annual target, but that target had been reduced from a prior 2 million.

For the quarter ended in December, Tesla reported an operating margin of 8.2%, nearly half of the 16% the company reported over the same period in 2022.