Tesla recently introduced more budget-friendly versions of its popular Model Y SUV and Model 3 sedan, priced at $39,990 and $36,990 respectively. This move comes as electric vehicle manufacturers face declining sales and market share amid heightened competition.
In the wake of this announcement, Tesla’s stock dipped by 2.1% during afternoon trading.
Reuters noted that Elon Musk had previously expressed plans to create a mass-market vehicle, but those plans for a $25,000 electric car were scrapped last year.
Last December, Musk indicated the vehicle’s price would be below $30,000 to qualify for the U.S. EV tax credit, which some described as a crucial benchmark.
The end of the tax credit in late last month resulted in a price increase of $7,500, contributing to record quarterly sales for Goose. However, unless more affordable options are introduced, sales may slow down for the remainder of the year.
“Demand for cars is still strong, but many people are simply unable to afford them,” Musk commented during Tesla’s earnings call in July. “If we can make cars cheaper, we can really enhance quality.”
Over the weekend, Tesla shared two intriguing clips on social media, generating buzz. One clip features headlights glimpsed in darkness, while the other shows wheels spinning for a few moments, concluding with “10/7.”
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Musk had originally aimed to kick off production of the new vehicle by the end of June. However, Tesla announced in July that it had only completed a preliminary run, with availability promised for the last quarter of the year.
The company is facing challenges due to slower sales of its older models, especially as competition ramps up in China and Europe, compounded by Musk’s controversial political views affecting brand loyalty.
Earlier this year, a refreshed Model Y was released, featuring enhancements like a new light bar and a rear touchscreen.
Additionally, Musk is steering the company toward artificial intelligence, focusing on concepts like robotaxis and humanoid robots. Tesla has indicated it will expand its range of affordable vehicles, although specific details were not provided.
Plans are also in place for a more basic version of the Model 3 sedan, according to sources cited by Reuters.
Introducing affordable models will be crucial for Tesla to achieve its target of delivering 20 million vehicles over the next decade, a goal set forth by the board as part of Musk’s proposed $1 trillion compensation plan.
