Musk to Launch $25,000 SUV to Rescue Tesla

By Douglas A. McIntyre Published Oct 7, 6:30AM EDT

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Tesla Inc. (NASDAQ: TSLA) may be more than a car company, but it needs car sales to keep its stock up.
Hence, the launch of a $25,000 version of the Model Y SUV.

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Musk to Launch $25,000 SUV to Rescue Tesla — © Maja Hitij / Getty Images News via Getty Images

Elon Musk says Tesla Inc. (NASDAQ: TSLA | TSLA Price Prediction) is no longer a car company. It is an artificial intelligence (AI) and robotics company, and it should be valued as such. That is why Tesla is worth as much as all the other publicly traded car companies in the world combined at $1.5 trillion (Ford’s market cap is $50 billion). However, Musk must know that investors believe that if he does not get troubled electric vehicle (EV) sales to rebound, the company and its stock will continue to be in trouble.

To hedge his car business’s success, Musk will launch a $25,000 version of the Model Y SUV, which is Tesla’s best-selling vehicle. The price point may also offset the end of the $7,500 EV tax credit. Most car industry analysts believe the end of this benefit will batter U.S. EV sales.

Musk has to be concerned that in the first three quarters of the year, Tesla’s U.S. market share was about 46%. It was 80% a decade ago. GM has started to gain ground, as its market share hit 13% for the same period. Ford’s reach is almost 7%.

A new EV sold in the United States costs about $10,000 more than a gasoline-powered one. Moreover, the price of electricity is rising as the price of gas is falling. EVs still face customers who do not want to wait a long time to charge their cars and may struggle to find public charging stations. EVs also go through tires more quickly and often do not fully charge their batteries in cold weather.

A $25,000 EV is the holy grail of the U.S. EV business. It is the one thing companies that make and sell EVs believe can bring in the tens of thousands of buyers who have been on the sidelines because of prices.

Musk’s move also offers some protection against Chinese EV competitors, which already have many models priced at $25,000. They cannot sell them in the United States because of tariffs. However, Musk has a large business in China. Chinese EVs have begun to enter the EU market.

Tesla may not be a car company, but it needs car sales to keep its stock up.

Tesla Stock Price Prediction and Forecast 2025–2030

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.