Tesla investors were not impressed with the launch of the latest models of Tesla EVs and shares fell in an immediate reaction to the release of the low-cost Model Y and Model 3.
Elon Musk’s Tesla is facing growing competition from Chinese players, such as BYD, which has overtaken Tesla in terms of sales in many geographies. There were hopes that new models could improve their position.
However, the launches did nothing to address concerns that Tesla was at risk of becoming just another EV maker amid the growth of specialist EV manufacturers and the increasing range of EVs produced by traditional automakers.
“After days of cryptic X posts, Tesla’s announcement landed with a dull thud for those dreaming of a game-changing new model. Instead, it debuted cheaper ‘standard’ trims of the Model 3 and Model Y, achieved by stripping out premium features like glass roofs, rear screens, and some creature comforts – but this is cost-cutting, not reinvention,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“For realistic investors, this was as expected, and still an important step to help bridge the affordability gap in the US, with the tax credit no longer on the table. The near-term focus is on squeezing costs from existing platforms, not launching a $25k car. That rumoured ‘Model Q’ or sub-$30k Tesla is still just chatter, with the Cybercab project likely occupying that slot in Tesla’s roadmap.”
Tesla shares fell 4% in US trade overnight but were slightly higher in the premarket on Wednesday.
Although investors will be disappointed about the lack of innovation in the new launches, many will have their eyes on a different prize. And that’s the future of autonomous vehicles.
Musk has been vocal about his intentions to become a leader in AVs and set out his stall with Robotaxis and limited launches of the driverless taxis in the US. There were early issues such as cars driving on the wrong side of the road. However, we are in the early stages of AV adoption, and Tesla shared interesting software developments that will lay the foundations for future growth in the area.
“Perhaps the more important headline, and one that went under the radar, wasn’t the cars at all – it was about software,” Britzman said.
“Tesla rolled out FSD v14, its biggest self-driving update in a year. The marriage of hardware and software is what really sets Tesla apart from most of its competition and is as important, if not more, than driving down the headline vehicle price.
“For investors looking for fireworks, this wasn’t it. But for those watching the autonomy story, yesterday was another important step toward the future Tesla is betting on.”