Why Tesla investors are holding on to hope for a cheap car
Despite terrible earnings numbers last night — declining vehicle sales, disappointing revenue and profit, enormous spending — Tesla stock is up more than 10% as of midday. That’s a welcome move for the car company, that’s been among the worst performers this year in the S&P 500.
Why the about face?
While Reuters reported earlier this month that Tesla is no longer making its long-awaited $25,000 mass-market car — news sent the stock, already suffering from headwinds across the EV industry, down even further— Tesla reported during its earnings that it’s going to make cheaper cars than it currently has.
Before the second half of next year, Tesla said it will release “more affordable models” that “will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”
So rather than release the $25,000 Model 2, Tesla is incorporating some of that technology into its existing models. UBS called it the Franken-3Y2.
That will likely make these new cars cheaper, but just not as cheap as Tesla once thought. Naturally, Tesla was scant on details but that was enough of a bone for Wall Street.
Why the need for a lower-cost car? The average price for a new EV last month was about $54,000, according to Kelley Blue Book, while the average price for any new vehicle was $47,000. To gain broad appeal, Tesla needs more cars near the bottom of the EV price range.
Currently the vast majority of Tesla models don’t fit on the above chart. Tesla’s cheapest model is about double what it costs for the cheapest EV, a Chevy Bolt.
Only a handful of Tesla’s were among the top 25 cheapest electric cars, according to data from InsideEVs, which has data on car prices after obligatory fees and tax credits. Another approximately 30 Tesla models were more expensive, including eight options that were more than $100,000.
That will likely make these new cars cheaper, but just not as cheap as Tesla once thought. Naturally, Tesla was scant on details but that was enough of a bone for Wall Street.
Why the need for a lower-cost car? The average price for a new EV last month was about $54,000, according to Kelley Blue Book, while the average price for any new vehicle was $47,000. To gain broad appeal, Tesla needs more cars near the bottom of the EV price range.
Currently the vast majority of Tesla models don’t fit on the above chart. Tesla’s cheapest model is about double what it costs for the cheapest EV, a Chevy Bolt.
Only a handful of Tesla’s were among the top 25 cheapest electric cars, according to data from InsideEVs, which has data on car prices after obligatory fees and tax credits. Another approximately 30 Tesla models were more expensive, including eight options that were more than $100,000.
