Several things negated the Tesla Inc. (NASDAQ: TSLA | TSLA Price Prediction) stock price drop that might have happened because of the electric vehicle (EV) maker’s mediocre earnings report. One factor was Elon Musk’s encouragement about how Tesla was really an artificial intelligence (AI) company. Another was the upcoming robotaxi. He added 2026 would be an “epic” year. For those listening to the call, the most important news is that Tesla will launch “more affordable” models.
Tesla stock traded flat the day after earnings.
Unlocking EV Sales
Affordability is the key?
Many consider affordability to be the key to unlock a surge in EV sales in the United States. EVs are expensive in comparison to gasoline-powered cars. This is often true, even with the $7,500 tax credit, which the Trump administration says will disappear.
The primary source of high-quality EVs is not available to Americans. These are products of Chinese car companies. They are often priced below $20,000. The U.S. tariff on these is 100%. The Trump administration is unlikely to change this. It is critical to protecting Ford and General Motors in their home markets.
The least expensive Tesla costs $31,000. However, it is a rear-wheel-drive Model Y. Many drivers no longer favor rear-wheel-drive cars. The price for the mid-tier Model Y is $40,000.
Interestingly, Musk refuted a report by Reuters that said Tesla was about to release a $25,000 car. He described the plan as “pointless.” Perhaps he has changed his mind.
Musk has to sell the future, and he has done it well in the past. In the most recently reported quarter, auto sales dropped 8% to $19.8 billion. Across the entire company, net income fell 71% to $2.3 billion. Tesla can claim it still makes money in a U.S. market where the competition, particularly Ford, loses money on every EV it sells.
It is hard to say how far in the future Tesla will release a true self-driving, AI-powered car. The same is true of the robotaxi. An inexpensive model should be released this year.
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