Image Credit: Reuters

Tesla Begins Work on Affordable Model as Q2 Sales Drop Sharply

Tesla has officially kicked off the initial builds of its long-awaited affordable electric vehicle (EV), even as the company grapples with a sharp decline in quarterly revenue and vehicle deliveries.

According to a statement released on Wednesday, Tesla reported a 17% drop in second-quarter revenue compared to the same period last year, marking the steepest year-over-year decline in over a decade. Total deliveries fell by nearly 4% from the previous quarter, raising concerns over slowing demand and rising competition in the global EV market.

As reported by Yahoo Finance, Tesla’s total revenue fell to $21.6 billion, below Wall Street expectations. The disappointing figures come amid price cuts across several models and economic uncertainty, which has weighed on consumer sentiment.

A Bold Step Forward with Affordable EV Plans

In a bid to expand its reach, Tesla revealed it has started “early builds” of its next-generation affordable model, long teased by CEO Elon Musk. The vehicle, reportedly priced below $30,000, is expected to play a key role in Tesla’s strategy to capture a broader market segment and fend off growing competition from Chinese EV makers and legacy automakers.

During the earnings call, Musk described the model as a “game changer” and hinted at a more efficient production process driven by the company’s next-gen vehicle platform. While no launch date was confirmed, investors are optimistic that a mass-market Tesla vehicle could revive growth in 2025.

For additional coverage, Channel News Asia provided insight into how this new model could realign Tesla’s business model in response to intense pricing pressure and global EV policy shifts.

Investors React to Mixed Signals

Shares of Tesla (TSLA) fluctuated after hours as investors digested the earnings miss alongside optimism over the new car development. Despite the revenue setback, some analysts view the company’s aggressive innovation and cost-cutting as long-term positives.

The earnings report also noted that margins have narrowed, largely due to price cuts and higher R&D costs. Musk acknowledged the need for “operational discipline” in the coming quarters.

The Edge Malaysia's report echoed concerns over Tesla’s delivery volumes but also highlighted optimism surrounding the company’s forward-looking strategy.

Outlook: Balancing Innovation with Market Realities

As Tesla pivots to meet the demand for more affordable EVs, the company faces a delicate balancing act. On one hand, it needs to maintain its innovation edge; on the other, it must manage profitability amid a fiercely competitive market.

With early builds of its affordable car underway, all eyes will be on Tesla’s ability to execute at scale without compromising quality or brand value. As EV incentives and regulations evolve globally, Tesla’s next chapter may be defined not by premium performance—but by mass-market appeal.

 

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