Tesla announced plans on Tuesday to introduce new models by early 2025, leading to an impressive surge of nearly 11% in its shares during after-hours trading.
This revelation regarding upcoming vehicle releases, including more affordable options utilizing existing production lines, instilled confidence among investors amidst the company's recent struggles with heightened competition and declining sales, resulting in quarterly performances below Wall Street expectations.
During a conference call with investors, CEO Elon Musk disclosed that production for these new models could commence as early as 2025, potentially even in late 2024. Previously, Musk had targeted the second half of 2025 for the launch of the highly anticipated Model 2, expected to be an affordable next-generation vehicle priced around $25,000. However, recent reports indicated that plans for the Model 2 had been scrapped, prompting Tesla's focus on alternative, undisclosed models.
Although Tesla did not directly address the reports regarding the Model 2 cancellation, it hinted at the development of different products, remaining vague about pricing specifics. These new models are expected to leverage aspects of both the current manufacturing lines and a next-generation platform, with a potential compromise on anticipated cost reductions.
In addition to the new vehicle lineup, Tesla alluded to a "purpose-built robotaxi product" utilizing a revolutionary manufacturing process, although no specific timeline was provided. Musk emphasized the company's strategy to exercise prudent capital expenditure management amidst uncertain market conditions.
Despite Tesla's reticence on details regarding the new models, industry analysts speculated that the shelving of the Model 2 indicated a strategic shift away from fundamentally different production processes. This move aligns with Tesla's apparent reluctance to invest significantly in new production facilities or retool existing ones.
Musk also reiterated his vision for Tesla's autonomous future, envisioning a fleet of self-driving vehicles operating akin to a combination of Airbnb and Uber. While some investors welcomed Tesla's plans for more affordable cars, others remained cautious, emphasizing the importance of actual delivery amid the company's track record of delays.
Furthermore, Tesla's decision to slow down new capacity expansion mirrors similar actions by other automotive giants in response to slowing EV demand growth and intensified competition, particularly from Chinese EV manufacturers.
Despite Tesla's weaker-than-expected quarterly results, the announcement of new models fueled optimism and contributed to a significant recovery in its stock value during extended trading, underscoring the enduring confidence in Tesla's long-term prospects despite short-term challenges.
