(Reuters) -Tesla quarterly results fell short of Wall Street targets on Wednesday as financing offers and discounts failed to boost demand for the aging lineup but eroded profit.

Tesla's valuation has soared with the election of U.S. President Donald Trump, who is a close ally of CEO Elon Musk, but the electric car company posted a dip in deliveries last year, raising pressure for it to roll out a new, lower-priced model, as well as the autonomous vehicles and software that Musk says underpin its financial future.

Tesla said it was on track to roll out cheaper vehicles in the first half of this year. Shares fell 3.4%.

Tesla has used cheap financing to pump up demand, a strategy analysts had predicted would erode automotive profit margins in future quarters as the company absorbs the impact of high interest rates.

Tesla's fourth-quarter profit margin from vehicle sales, excluding regulatory credits, fell to 13.59% from 17.05% in the prior three-month period, according to Reuters calculations. Wall Street had expected the figure to be 16.2%, according to 23 analysts polled by Visible Alpha.

Revenue was $25.71 billion for the October-December quarter, compared with estimates of $27.27 billion, according to estimates compiled by LSEG.

The EV pioneer's annual deliveries dropped for the first time last year, due to higher borrowing costs and intense competition.

Rivals such as China's BYD, as well as European manufacturers BMW and Volkswagen have launched new cheaper models to capture market share.

Tesla has said it expects volume growth of 20% to 30% in 2025 and investors believe a cheaper model based on current platforms set to be launched in the first half and higher deliveries of the Cybertruck will help achieve the target.

The company, however, has not revealed details regarding pricing, features and how it would be different from current offerings.

The company's gross profit margin stood at 16.3% in the October-December period, lower than estimates of 19.03%, according to 20 analysts polled by LSEG. Tesla posted a profit margin of 19.8% in the third quarter.