- Elon Musk said Tesla would release cheaper electric vehicles sooner.
- The move came after Tesla lowered prices due to declining sales and growing competition.
- Tesla’s first quarter was marked by reduced deliveries, layoffs and stock shortages.
Elon Musk presented investors with a long-awaited prize on Tuesday – cheaper Tesla models. This caused stocks to skyrocket.
During Tesla’s highly anticipated first-quarter earnings conference call, CEO Musk spoke about the company’s efforts to ramp up production of cheaper electric vehicles. Investors have been clamoring for these cars for months, amid falling sales of current models.
Musk didn’t give many details, like how much the cars will cost or when exactly they will be available. But that was enough to calm investors, and Tesla’s stock rose 13% after hours.
“If you have a great product at a great price, sales will be great,” Musk said on the call.
He said Tesla plans to continue making its cars and pricing more competitive. Automakers around the world, including the once dismissive Musk, worry that low prices for Chinese electric vehicles are hurting their sales.
Tesla’s cheapest models will be produced on existing manufacturing lines. Production could begin late this year or early 2025, instead of the second half of 2025, Musk said.
Tesla’s cheapest car in the United States is the Model 3, which starts at $38,990. The average American electric vehicle costs $53,758. The company sold 220,910 Model 3s last year.
Analysts were cautiously optimistic about Musk’s announcement.
“It looks promising, but Tesla is becoming more of a control stock based on the number of delays we’ve seen in previous rollouts,” Jay Woods, chief global strategist at Freedom Capital Markets, told Reuters. “If they can keep their promises, then that’s a big step forward.”
Days before the results, the electric vehicle maker slashed car prices in key markets including the United States, China and Europe.
Tesla has offered a car for less than $30,000 since 2020. Earlier this month, Reuters reported that the company was abandoning plans for a $25,000 compact car. Musk denied this story.
Significant challenges and a plummeting stock
Although the promise of cheaper cars has brought relief to investors, Tesla’s troubles are far from over.
During Tuesday’s earnings conference call, analysts asked Musk, who holds executive positions at at least five companies, if he was spread too thin. Tesla’s head of investor relations announced his departure from the company on the call, making him the third top executive to depart in the past week.
The first quarter of the year was disastrous for the electric vehicle maker.
Tesla reported disappointing deliveries in the first quarter earlier this month and I was going through a tough time 10% global layoffs last week. Friday, Tesla recalled nearly 4,000 Cybertrucks due to faulty accelerators. Price cuts made by Tesla this weekend were reciprocated by its Chinese electric vehicle rivals, who reduced theirs further.
Tesla stock is down 42% year to date.
businessinsider
