Tesla's Budget EVs Spark Share Slump Despite Hopes for Affordable Ride

Tesla has introduced new, lower-priced versions of its popular Model Y and Model 3 cars in the United States. The company hopes these more affordable vehicles will attract buyers after a key US tax credit for electric cars expired. However, the announcement did not impress investors, and Tesla's shares fell by about 4 percent. The new models are only $5,000 cheaper than the previous versions, which disappointed many who expected a bigger price drop. Tesla has been losing ground to competitors, especially Chinese carmakers, who are offering more affordable electric vehicles with new features. The company has been slow to release new, budget-friendly cars, even though demand for them is growing. Elon Musk, Tesla's CEO, had previously promised a much cheaper car but changed his plans last year to focus on developing robotaxis and humanoid robots instead. Some analysts say Musk is good at getting people excited about the future, but sometimes the present does not live up to those expectations. Despite Musk's focus on artificial intelligence and robotics, Tesla still relies heavily on its car sales. The company faces several challenges, including reduced government support for electric vehicles, increased competition, and some negative reactions to Musk's political involvement. In July, Tesla reported a significant drop in revenue for the second quarter, falling to $22. 4 billion after deliveries dropped by 14 percent. Last week, Tesla and other carmakers reported record sales of electric vehicles over the past three months, but experts believe this was mostly due to buyers rushing to purchase before the government subsidy ended. Tesla's vehicle prices for US customers increased by as much as $7,500 this month after the tax credit expired. Executives at Tesla have admitted that losing the tax credit will likely hurt their business.

The new lower-cost models are meant to help offset the loss of the tax credit, but they do not include some features found in other Tesla vehicles. According to Tesla's website, the stripped-down Model Y will cost $39,990 and the Model 3 will cost $36,990 in the US. These new versions are not yet available in the UK. Tesla's last major vehicle launch, the Cybertruck, has not performed as well as expected, with only about 52,000 units sold in the US since deliveries began in 2023. This has added to concerns about Tesla's ability to keep up with competitors and maintain its position as a leader in the electric vehicle market.

Tesla is facing a tough situation. The company needs to find ways to keep its cars affordable and appealing to customers while dealing with less government support and more competition. While Musk continues to talk about exciting future projects like robotaxis and humanoid robots, the reality is that Tesla's success still depends on selling cars. The new lower-cost models may help, but some experts believe Tesla needs to do even more to stay ahead. The company's future will depend on how well it can adapt to changing market conditions and continue to offer vehicles that people want to buy.