New York City, New York – Tesla Inc. saw a significant drop in its shares during intraday trading, which were later recovered after CEO Elon Musk refuted a report suggesting the cancellation of plans for a more affordable vehicle. The stock initially fell 6.2% following a report by Reuters claiming the project’s termination, backed by anonymous sources and company messages. However, Musk’s denial led to a subsequent 1.3% decrease in shares by 1 p.m. in New York on Friday.
Musk had initially hinted at a $25,000 model at a battery-related event back in September 2020, expressing confidence in Tesla’s ability to deliver an electric vehicle at that price point within three years. The delay in launching the affordable car has proven costly for Tesla, as the company recently reported its first decline in quarterly vehicle deliveries in four years. In addition, Tesla is facing tough competition in China from manufacturers like BYD Co. who offer newer and cheaper electric vehicles.
Following Battery Day in September, Musk reportedly vetoed plans for a less expensive model for two years, believing that Tesla’s focus on self-driving technology would make the $25,000 car unnecessary. Despite Musk’s claims of nearing the launch of a fully self-driving vehicle, Tesla is yet to introduce features that can be safely used without drivers’ constant supervision.
During Tesla’s latest earnings call, Musk assured investors that work on the lower-cost vehicle is progressing well, with plans to start production towards the end of 2025. The company also emphasized radical changes in its manufacturing approach during an investor day in March last year, claiming to have developed a manufacturing system far more advanced than any other in the automotive industry.
Tesla’s upcoming earnings release scheduled for April 23 will shed more light on the company’s future plans and performance in the market. With Musk’s bold vision for Tesla’s future, the electric vehicle manufacturer continues to face challenges in delivering on promises of affordable vehicles and cutting-edge technology.