Achi news desk-
Tesla has promised to start selling cheaper models next year, days after a Reuters report revealed the company had abandoned plans for an all-new Tesla that would cost just $25,000.
The news that Tesla is scrapping the Model 2 came amid falling sales and profits, and a decision to cut one-tenth of the company’s global workforce. Reuters also noted increasing competition from Chinese electric vehicle manufacturers.
Tesla deliveries fell in the first quarter for the first annual drop since the start of the pandemic in 2020, missing analysts’ forecasts by a mile in a sign that even price cuts have not been able to stop increasingly heated competition in the EV market. .
Profits fell by 50%, disappointing investors and leading to a collapse in the company’s share prices, which meant that any good news was urgently needed. Tesla delivered: it said it would bring forward the date for the release of new, lower-cost models. These would be produced on its current platform and delivered in the second half of 2025, according to the BBC.
Reuters cited the company as warning that this change in plans “could lead to lower-than-expected cost reductions,” however. This suggests that the price tag of the new models is unlikely to be as small as the promised $25,000 for the Model 2.
The decision is based on a significantly lower risk appetite in Tesla management, which is likely to be affected by the recent financial results and intense competition with Chinese electric vehicle manufacturers. Shedding the Model 2 and opting instead for cars to be produced on existing manufacturing lines is the safer move in these “uncertain times” according to the company.
Tesla is also cutting prices, as many other electric vehicle makers are doing amid a marked decline in sales in key markets such as Europe, where the end of subsidies has severely hit demand for EVs. The cut is about $2,000 on all the models Tesla currently sells.
By Charles Kennedy for Oilprice.com
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