Tesla to Introduce Cheaper EV Models and Autonomous Service

By Abhirup Roy and Akash Sriram
(Reuters)
Tesla announced plans to launch new, affordable electric vehicle models in the first half of 2025 and commence testing a paid autonomous car service in June, despite quarterly results falling short of Wall Street expectations.

Tesla’s market value has benefited from President Trump’s election, a close ally of CEO Elon Musk. The company faced falling deliveries last year, increasing pressure to deliver more affordable models and autonomous technologies that Musk believes are vital for its future success.

Shares rose by 4% after Tesla revealed cost-cutting measures and advancements in new vehicle development. Musk stated, “Teslas will be in the wild, with no one in them, in June, in Austin,” while emphasizing a cautious approach to ensure safety.

Details on how the paid service will operate remain scarce. Tesla’s full self-driving (FSD) software will also undergo unsupervised testing in several states, including California, this year.

Musk did not disclose specifics regarding the upcoming affordable vehicles, including their pricing and specifications. The company aims to lower production costs; it reported the lowest average costs for materials and labor in the fourth quarter, dropping from nearly $39,000 to about $33,000 per vehicle.

Analysts view Tesla’s renewed commitment to deliver new models as a positive sign. Acknowledging the importance of reduced costs, Thomas Martin from Globalt Investments commented on the company’s ability to execute efficiently.

In April, it was reported that Tesla scrapped plans for a low-cost vehicle platform, known as Model 2, opting instead to produce affordable models using its existing electric vehicle platform.
Production of a robotaxi is planned for 2026 at Tesla’s Texas factory.

Investor optimism surrounds the potential of FSD and robotaxi services becoming reality in the coming years. However, Musk noted that some older Tesla models need computer upgrades for full self-driving capabilities.

Despite previously utilizing inexpensive financing to boost demand, analysts warned that high interest rates could impact profit margins. Tesla’s profit margin from vehicle sales dropped to 13.59%, failing to meet Wall Street’s expectations of 16.2%.
Fourth-quarter revenue stood at $25.71 billion, below estimates of $27.27 billion, with adjusted earnings per share at 73 cents, also underperforming expectations.

With annual deliveries declining for the first time last year amid stiff competition and rising borrowing costs, Tesla anticipates a return to growth in 2024 and expects vehicle sales to increase by 20% to 30% in 2025.

President Trump’s discussions about tariffs on imports could further strain Tesla’s supply chain, according to CFO Vaibhav Taneja.

Analysts like Garrett Nelson from CFRA Research remain optimistic about self-driving prospects and the anticipated growth in Tesla’s energy storage unit deployments.