Tesla to push for more affordable EVs in 2025

Tesla has reiterated its commitment to launching a more affordable electric vehicle (EV) in early 2025, as part of its third-quarter earnings report for 2024. The company announced that preparations for these lower-cost models are underway, as it aims to make EV ownership accessible to a wider audience. Tesla CEO Elon Musk had previously abandoned plans for a "Model 2" priced at around $25,000, but following investor pressure, he reaffirmed Tesla's focus on affordable EVs. However, it remains unclear whether the new models will be completely different from existing vehicles or simply a more affordable version of the Model 3.

Tesla's financial performance in Q3 2024 exceeded expectations. The company reported $2.2 billion in net income on $25.2 billion in revenue, marking a 17 percent increase in profit and a 7 percent rise in revenue compared to the same period in 2023. Analysts had predicted a decline in profits, but Tesla's earnings beat those projections, bolstered in part by strong regulatory credit sales.

The company's gross margins, which have been in decline due to price cuts and fluctuating demand, saw slight improvement. Tesla reported gross margins of 19.8 percent, up from 18 percent last quarter. The cost per vehicle also reached a record low of $35,100. Tesla produced its 7 millionth vehicle on October 22nd, with the Cybertruck becoming the third best-selling EV in the U.S., following the Model Y and Model 3. Notably, the Cybertruck achieved positive gross margins for the first time.

Despite these positive signs, Tesla's Q3 deliveries fell short of analysts' expectations. The company delivered 462,890 vehicles during the quarter, a 6.3 percent increase from Q2 2023, but concerns remain about a potential decline in annual deliveries after years of rapid growth. Competition in the global EV market, particularly from Chinese automaker BYD, continues to present challenges for Tesla.

During a conference call with investors, Musk projected vehicle growth of 20 to 30 percent for 2025, citing lower production costs and advancements in autonomous driving technology. He also revealed that Tesla is testing a ride-hailing app with employees in the Bay Area, with plans to launch a paid service next year.

Tesla has faced skepticism over its shift towards autonomous vehicles and robotics, particularly following a recent robotaxi event that was met with disappointment from investors. While the company showcased ambitious concepts, it provided few details on the practical implementation of the technology, which contributed to a drop in Tesla's stock price. However, the company's stock rebounded in post-market trading following the release of the Q3 earnings report.