Tesla Aims for Early 2025 Launch of Cheaper EV Models

US electric vehicle (EV) giant Tesla Inc. is looking to accelerate the release of new, cheaper EV models as it observed a drop in profit margins and sales.

The Texas-based carmaker’s Chief Executive Elon Musk said they intend to introduce the more affordable, unidentified vehicles by the end of this year or early 2025 instead of the second half of next year schedule they initially stated.

The number, type, and target prices of the new models have yet to be specified, although they will be built on the company’s existing production lines and utilize certain features of its existing and latest platforms.

The EV firm aims to completely use its current production capacity to fuel an increase of over 50% from the 2023 output before investing in new production lines.

Musk declined to reveal whether the planned EVs would be entirely new models or an upgraded version of existing vehicles.

It was also not immediately apparent if the cheaper models referred to the company’s supposed-to-be mass-market car, Model 2, which the firm had reportedly abandoned, although Musk dismissed the news.

Tesla’s Struggles with Improving EV Earnings

The earlier timing of the new models had a positive reception from investors, leading Tesla’s shares to be nearly 12.50% higher in the after-market to provide essential gains following months of nursing losses amid intense competition and stumbling sales.

The stock was last up 13.38% in after-hours trading in New York. The surge also helped offset what appeared to be a disappointing quarter for the major EV company.

The carmaker presented lower-than-expected figures for the first quarter on Tuesday. Revenue fell 9% year over year (YoY) to $21.30 billion, missing estimates of $22.15 billion and marking the sharpest YoY drop since 2012.

Earnings per share (EPS) in the three months ending March 31 stood at $0.45, also ending below forecasts of $0.51 per share.

While still leading the EV race, the company’s earnings have been tested for several quarters. Tesla’s automotive gross margin was 16.4% in the first quarter, compared to the 30% record margin it posted at the start of 2022.

The firm’s sales strategy has also encountered hurdles for most of this year. Its 2023 comprised price reductions across its EV lineup in a bid to improve sales volume, but a slowdown in demand for its vehicles followed that issue.

The Model 3 and Model Y, which start at a $40,000 price, are the carmaker’s current main drivers of sales volume.

EV sales worldwide continue to be under pressure as many carmakers shift their focus to hybrid vehicles from pure electrics, according to the company. Furthermore, the number of Chinese EVs in the market has grown, weakening Tesla’s price point while remaining reliable.

Such troubles have resulted in the EV giant’s stock losing 42% for this year through Tuesday’s close, making it the S&P 500 index’s weakest performer.