Tesla rolled out new, cheaper versions of two of its electric car models on Tuesday, hoping these offerings would help revive flagging sales. However, investors reacted negatively, dumping the stock regardless of the news.
The new Model Y, priced just under $40,000 with a stripped-down interior, arrives during a brutal year for the company. Tesla is struggling to attract more customers amid an aging product lineup, stiff competition from foreign EV makers, and anti-Elon Musk boycotts. The stock market's reaction suggests the new models are not expected to provide a significant boost.
“Investors were looking for something truly different, not an iteration of an old product,” said Edmunds analyst Ivan Drury, as Tesla stock dropped sharply in the final minutes of trading. “I can't imagine this will bring levels back to what they want”.
Cheaper version of its Model 3
Tesla also announced a cheaper version of its Model 3 for under $37,000. For New York residents taking advantage of a state rebate, the price dropped below $35,000.
While Tesla has discussed a cheaper car to appeal to cost-conscious consumers for years, the two new “standard” models are priced well above the long-promised $25,000 tag. Their release comes as customers are widely expected to hold off on purchases over the next several months due to the recent expiration of the $7,500 federal tax credit for electric vehicles.
Tesla stock fell 4.5 percent to $443.09 on Tuesday, contrasting sharply with the previous day’s close, which saw the stock jump more than 5 percent on anticipation of the announcement.
Comparing the new models
Compared to previous versions, the new Model Y features a shorter 321-mile driving range, fewer audio speakers, and a fabric (not microsuede) interior. The model also lacks a panoramic glass roof and a touchscreen in the second row. It faces stiff competition in the $40,000 EV range from vehicles like Ford’s Mustang Mach-E, Chevrolet’s Equinox EV, and Hyundai’s Ioniq 5. Similarly, the new Model 3 has reduced its driving range, ambient lighting, and other features.
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