Tesla (TSLA.O) unveiled more affordable versions of its best-selling Model Y SUV and its Model 3 sedan on Tuesday at $39,990 and $36,990, respectively, as the electric-vehicle maker seeks to reverse falling sales and waning market share amid rising competition.
MARKET REACTION:
Tesla shares dropped 4.3% in afternoon trading.
The S&P 500 (.SPX) was down 0.4% while the Nasdaq fell 0.7%.
COMMENTS:
BRIAN MULBERRY, SENIOR CLIENT PORTFOLIO MANAGER, ZACKS INVESTMENT MANAGEMENT, COLORADO:
The more popular model is certainly the all wheel drive model, and that peaked in price in 2023 at $65,990 per unit, making the announcement of $39,990 a very attractive price point. It also includes significant upgrades in technology, including an FSD option available."
"This reflects manufacturing efficiency gains as this project was clearly completed alongside the CyberCab model, where there were significant parts and design overlaps that created the margin to drop the price under $40k, a significant level that makes this model attractive to consumers in light of the expiration of tax incentives last week."
ART HOGAN, CHIEF MARKET STRATEGIST, B. RILEY WEALTH, NEW YORK:
"If you look at what Tesla has done since April 2, it's a complete U-terms in terms of stock price. It's hard to orchestrate an announcement in the near term that's going to match the exuberance in the stock price. I would also argue that the excitement around the company has less to do with its the number of EVs that it sells, and more to do with the number of cities that it gets into with Robo taxi and fully self-driving cars."
DENNIS DICK, TRADER, TRIPLE D TRADING, ONTARIO
"Again for Tesla, for the second time in a row, it's 'buy on rumor, sell on news'. We just saw with their recent sales report for last month, where the sales were pretty darn good and the stock sold off on it. You're getting to a point where we’re just getting heavier expectations."
"It's not just Tesla. You're seeing it across the board right now. There's been a bit of a turn the last couple of days, where selling the rip is kind of cool again. We're seeing 'sell the rip' materialize with lots of stocks."
SETH GOLDSTEIN, ANALYST, MORNINGSTAR, CHICAGO:
"The new Model Y and Model 3 offer consumers lower-priced vehicles that can compete in the higher-end affordable SUV and sedan categories. These vehicles offer more basic features versus the more expensive versions. Yet, the price points should help Tesla overcome the loss of the EV tax credit that expired in September as the company aims to maintain deliveries momentum in the important fourth quarter of the year."
"I think a sub-$40,000 price will help Tesla grow deliveries as it opens the Model 3 and Model Y up to more consumers who are not able or willing
to pay up for a higher-priced vehicle."
SHAY BOLOOR, CHIEF MARKET STRATEGIST, FUTURUM EQUITIES:
"It's basically a pricing lever and not much a product catalyst. Tesla's done this play before where they bring out a 'Standard' trim a few months after launch to hit a lower price point and keep the lineup fresh."
"The $39.9K Model Y undercuts the psych $40K barrier and makes Tesla's best-selling crossover more accessible, but I don't see it as unlocking new demand at scale. You'll get some volume lift but mostly from buyers trading down from the premium trims, so it's more mix-shift than incremental growth."
Big picture, the cars remain the cash engine; the real story for Tesla is still autonomy and robotics."
