Tesla’s earnings plunge, but the company promises cheaper car model

The company reported a 9% drop in total revenue, which also missed analyst estimates. And its profit margin declined by 2 percentage points.

But Tesla heartened some investors by announcing it plans to move ahead with a lower priced version of one of its cars, which will go into production in the second half of 2025.

Tesla has a history of not living up to timelines on vehicle launches. But the promise that it is still moving ahead with a lower-priced model was assuring news in the wake of reports that it would drop plans for the vehicle altogether.

Shares of Tesla rose 8% in after-market trading on the promise of a cheaper model.

Tesla has been battered by a series of bad news that has driven down the value of its shares more than 40% so far this year. Earlier this month, it reported its first year-over-year decline in global sales since the pandemic and unveiled plans to cut more than 10% of its staff. It also continued its year-long series of price cuts, with the most recent coming last weekend.

The drop in stock value has even some Tesla bulls worried about the future for the world’s most valuable automaker. But it is facing increasing competition from both established Western automakers — which are rolling out their own EV offerings — and Chinese automakers, which are offering low-priced EVs.

In the final three months of last year, Tesla lost its title as the world’s largest EV maker to Chinese automaker BYD.

After Reuters reported earlier this month that Tesla was dropping plans for a cheaper model, popularly referred to as the Tesla Model 2, because of competition from China, CEO Elon Musk tweeted “Reuters is lying (again),” without giving any details of the company’s plans. But in January, he did warn that Chinese automakers could ‘demolish’ rivals with low priced EVs.

This is a developing story and will be updated.

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