New York, October 8(HS): Tesla shares fell nearly 4% after the company unveiled lower-priced versions of its popular Model Y SUV and Model 3 sedan, disappointing investors who had hoped for a more significant development. The new models are priced only about $5,000 less than the existing versions, at $39,990 for the Model Y and $36,990 for the Model 3, according to Tesla’s US website.
The move comes as Tesla faces mounting pressure from declining sales, reduced government incentives, and rising competition in the electric vehicle (EV) market. The company’s US tax credit for EVs expired at the end of September, prompting an increase of up to $7,500 in vehicle prices earlier this month.In July, Tesla reported a 12% drop in quarterly revenue to $22.4 billion — its sharpest decline in a decade — as deliveries plunged 14%.
The company’s recent success in EV sales was largely attributed to buyers rushing to purchase before the tax credit expired.Analysts say the new lower-cost models, which omit some standard features, are an attempt to offset the loss of that subsidy. However, many on Wall Street were unimpressed. “It’s a lower-cost EV that everyone expected,” said James Stanley, a macro analyst at StoneX.
Tesla CEO Elon Musk, who previously scrapped plans for a budget car to focus on robotaxis and humanoid robots, now faces questions about the company’s long-term strategy. Despite Musk’s growing emphasis on artificial intelligence ventures, Tesla’s core automobile business remains the company’s main revenue source.
Adding to the challenges, Tesla is contending with competition from Chinese automakers and lingering consumer backlash over Musk’s political affiliations. Its previous major launch, the Cybertruck, has sold only around 52,000 units in the United States since deliveries began in 2023.
Investors are watching closely to see whether Tesla can regain momentum in an increasingly crowded global EV market and navigate the headwinds created by the end of US government support for electric vehicles.
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Hindusthan Samachar / Jun Sarkar
