Authors: Hyunju Jin and Akash Sriram
(Reuters) – Tesla said on Tuesday it would introduce “new models” by early 2025 using its current platforms and production lines, as it scrapped more ambitious plans to produce an all-new model that had been expected to cost $25,000 dollars.
Talk of new offerings sooner sent Tesla (NASDAQ:) shares soaring in after-hours trading, providing a much-needed boost after months of decline during which Tesla battled stiff competition and falling sales. The gains came despite Tesla reporting first-quarter results that fell short of Wall Street’s expectations.
CEO Elon Musk declined to provide details about the new vehicles, but said they would include more affordable models that would go into production by early 2025. This is just ahead of the goal that Musk previously set before launching an all-new low-cost model, popularly known as the Model 2.
On April 5, Reuters exclusively reported that Tesla had abandoned plans to produce the Model 2, which investors expected would help transform Tesla into a mass-market automaker. Musk initially responded to the story with a post on his social media platform X that said, “Reuters is lying,” without citing any inaccuracies.
Neither Tesla nor Musk spoke directly to the Reuters report on Tuesday.
Instead, they discussed unidentified new models that appeared to be different products, without specifying their quantity or type, or specifying their target price.
According to Tesla, the new models will be built on Tesla’s current production lines and will use “aspects” of its current and next-generation platforms. He warned that the plan could “result in smaller cost savings than previously expected,” suggesting the cars could cost consumers more than the Model 2’s expected $25,000 price.
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The automaker said its plan to launch new models will allow it to better control capital spending in “uncertain times.”
Telsa Chief Executive Lars Moravi said the company would play it safe by scrapping plans for an all-new model with a “revolutionary” manufacturing process. Tesla’s work on its next-generation affordable car could be “transferable” to the cars Tesla plans to launch early next year, he said.
“We’re not trying to just throw away this engineering work,” Moravi said. “We’re going to take it and use it.”
Musk declined to answer an analyst’s question about whether the new cars would be entirely new models or tweaks to existing vehicles.
“I think we’ve already said everything we wanted to on that front,” Musk said.
One observer took Tesla’s comments about the new models as confirmation that the company has put plans for a Model 2 on hold.
“It seems clear that a new vehicle platform is really on hold for now,” said Sam Abuelsamid, an analyst at Guidehouse Insights. “The next generation car was expected to use fundamentally different manufacturing processes than current models. Given the lack of desire to spend billions on new production facilities or retooling existing plants, it looks like we will see Tesla continue to create current products.”
Currently, the Tesla Model 3 and Model Y, with starting prices in the $40,000 range, are the only high-volume sellers.
ROBOTAXI ON AIRBNB, MODEL UBER
Tesla also mentioned a “purpose-built robotaxi product” it planned to create using a “revolutionary” manufacturing process, without giving a timeline for its release. A Reuters article on April 5 reported that Tesla plans to continue developing a self-driving robotaxi on the same platform it developed for the Model 2.
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Musk spent much of the call with analysts laying out ambitious plans to diversify Tesla’s business into artificial intelligence, humanoid robots and managing a fleet of millions of autonomous vehicles – all based on software and hardware products that the automaker has not yet fully developed.
Musk said Tesla “should be viewed as an artificial intelligence robot company” rather than a car manufacturer.
The announcement implies a significant change in Tesla’s fundamentals. More than 80% of Tesla’s revenue in the first quarter came from selling electric vehicles.
Musk said Tesla’s fleet of self-driving cars would be “like a combination of Airbnb and Uber (NYSE:).” Some vehicles will be owned and operated by Tesla, others will be privately owned but leased through the Tesla network.
The comments echoed Musk’s 2019 presentation, when he said a “robotaxi network” would be operational by 2020.
Tesla’s 12.5% rise in extended trading added about $57 billion to Tesla’s market capitalization, offsetting some of the losses from a more than 40% decline this year.
“SHOW PROMOTIONS”
Tesla’s plan to produce more affordable cars pleased investors despite weak quarterly results after the market closed. But some remained skeptical.
“It sounds promising, but Tesla stock is becoming increasingly telling given how many delays we’ve seen in previous releases,” said Jay Woods, chief global strategist at Freedom Capital Markets. “If they can do that, it’s a great achievement.”
A more frugal strategy could also save Tesla significant investment in a redesigned car and new production lines to produce it. Tesla’s decision to put the brakes on capacity expansion mirrors similar decisions by General Motors (NYSE:) and Ford Motor (NYSE:) in response to slowing growth in electric vehicle demand in the United States and increased competition from Chinese electric vehicle makers in the world’s largest markets. car market.
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“Global electric vehicle sales continue to be under pressure as many automakers prioritize hybrids over electric vehicles,” Tesla warned.
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, up from $23.33 billion a year earlier. Analysts on average estimated the amount at $22.15 billion, according to LSEG.
Tesla’s average revenue per vehicle delivered in the quarter fell nearly 5% from a year ago to $44,926 per vehicle, reflecting the impact of repeated price cuts.
Net income in the first quarter was $1.13 billion, compared with $2.51 billion a year earlier.