Tesla said on Tuesday it would introduce “new models” by early 2025, sending its shares soaring nearly 11% in after-hours trading.
Tesla (NASDAQ:TSLA)’s talk of new vehicles, which it said would include “more affordable models” using current production lines, lifted investor confidence in the EV maker. The company has been struggling with fierce competition and shrinking sales that left it with quarterly results that missed Wall Street’s estimates.
Chief Executive Elon Musk told investors on a conference call that production of new models would start early in 2025, if not late this year. In January, he had cited the second half of 2025 as the target for the launch of a widely anticipated next-generation affordable car, often called the Model 2.
Reuters exclusively reported on April 5 that Tesla had scrapped plans for the Model 2, which investors had expected to cost $25,000 and to drive Tesla’s growth into a mass-market automaker.
Tesla on Tuesday did not directly address the Reuters report.
Instead, it discussed unidentified new models that appeared to be different products.
The new models would be built on Tesla’s current manufacturing lines and use “aspects” of its current platform and a next-generation platform. It cautioned that this plan may “result in achieving less cost reduction than previously expected.”
It also mentioned a “purpose-built robotaxi product” that it planned to build with a “revolutionary” manufacturing process, without offering a timeline for its release. The April 5 Reuters story reported that Tesla planned to continue developing a self-driving robotaxi on the same platform it had been developing for Model 2.
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The automaker said its plan for new models would let it better control capital expenditures during “uncertain times.”
Musk declined to answer an analyst’s question about whether the new vehicles would be all-new models, or tweaks to existing vehicles. “I think we’ve said all we will on that front,” he said.
One observer took Tesla’s comments on new models as a confirmation that it had halted plans for the Model 2.
“It seems clear that the new vehicle platform has indeed been shelved for now,” said Sam Abuelsamid, an analyst at Guidehouse Insights. “The next gen vehicle was supposed to use fundamentally different production processes from current models. With no desire to spend billions on new production facilities or retool existing factories, it seems like we will see Tesla continue to build the current products.”
Musk devoted much of the call with analysts to outlining ambitious visions for diversifying Tesla’s business into artificial intelligence, humanoid robots and operating a fleet of millions of autonomous vehicles – all based on software and hardware products the automaker has not yet fully developed.
Tesla “should be thought of as an AI robotics company,” not a car maker, Musk said.
The statement implies a substantial change in Tesla’s fundamentals. More than 80% of Tesla’s revenue in the first quarter came from selling electric cars.
Musk said Tesla’s self-driving vehicle fleet will be “like a combination of Airbnb and Uber (NYSE:UBER).” Some vehicles will be owned and operated by Tesla, others will be vehicles owned by individuals but rented out on Tesla’s network.
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The comments echoed a presentation from Musk in 2019, when he said a “robotaxi network” would be operating by 2020.
Tesla’s plan for more affordable cars pleased investors despite its weak quarterly results after the bell. But some remained skeptical.
“Sounds promising, but Tesla is becoming more of a show me stock based on how many delays we’ve seen in previous roll outs. If they can deliver, then this is a great development,” said Jay Woods, chief global strategist at Freedom Capital Markets.
Tesla’s decision to tap the brakes on new capacity mirrors similar decisions at General Motors (NYSE:GM) and Ford Motor (NYSE:F) in response to slowing growth in EV demand in the United States and intensifying competition from Chinese EV makers in the world’s largest auto market.
“Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs,” Tesla warned.
The recovery in Tesla’s stock late on Tuesday added nearly $50 billion to its market capitalisation and helped reverse a plunge of over 40% so far in 2024.
Tesla’s quarterly revenue fell for the first time since 2020, when the COVID-19 pandemic hampered production and deliveries.
The company on Tuesday reported revenue of $21.3 billion for the three months ended March, compared with $23.33 billion a year earlier. Analysts on average had estimated $22.15 billion, according to LSEG data.
Tesla’s average revenue per vehicle delivered in the quarter fell by nearly 5% from a year ago to $44,926 a vehicle, reflecting the impact of repeated price cuts. – Reuters
