Tesla Stock Rides On Future Affordable Models And Rumored Model Q
Tesla is set to make a major announcement about an affordable vehicle in June. That, more than Robotaxi, may be the biggest driver of Tesla's stock price.
Despite all the Tesla analyst chatter about Full Self Driving, AI and the Tesla Robotaxi launch in June, the average EV consumer isn't that interested in autonomous vehicles. At least not yet. Numerous reports over the last few years show that autonomy just isn't an important factor when buying a car. A February survey from AAA on autonomous vehicles, titled 'AAA: Fear in Self-Driving Vehicles Persists' shows only 13% of U.S. drivers would trust riding in self-driving vehicles. On the other hand, consumers desperately want cheaper EVs. In case you haven't noticed, EVs keep getting more expensive. In March, the average transaction price for new electric vehicles was $59,205, a 3.8% increase from the previous month and a 4.4% increase from the previous year, according to Cox Automotive. The last thing the EV consumer needs is another pricey EV loaded with AI and priced way out of their reach. Especially, as consumers rethink the whole EV thing in the face of obstacles like public charging.
'We're still focused on bringing cheaper models to market soon,' said Tesla chief financial officer Vaibhav Taneja during the first quarter earnings conference call on April 22. 'The start of production is still planned for June,' he said. If that pans out, something along the lines of a $30,000 Tesla EV – dubbed the Model Q by Deutsche Bank - would get consumers' attention, despite pockets of anti-Elon sentiment. The upcoming affordable model is expected to use a mixed-platform approach, combining components from Tesla's next-generation platform and existing Model 3/Y architecture, allowing production on current assembly lines in Fremont, Calif., Austin, Texas, and potentially Shanghai and Berlin. This strategy reduces costs and accelerates the rollout compared to a fully new platform. The new affordable Tesla is expected to be autonomous and FSD compliant.
Interest in the Model 3 – Tesla's cheapest EV – is waning. Deliveries of the Model 3 were 52,520 in Q1 of this year, a drop from 57,928 in Q4, according to estimates by Cox Automotive. And it's not clear if the refreshed 'Juniper' Model Y will maintain its momentum as the best selling EV in the U.S. as consumers look to the crush of new EV offerings from competing brands like Cadillac, Chevy, and Honda.
'We have seen a decline in several metrics for Tesla in recent months,' said Tom Libby, an analyst at S&P Global Mobility, in an email. 'The brand's loyalty has declined, its conquest/defection ratio has declined (households coming into Tesla from another brand divided by households defecting from Tesla to another brand), and the percent of Tesla households returning to market and buying another EV that acquire another Tesla has declined as well,' he said.
A new Tesla nameplate could help to jump start new sales, particularly in light of Tesla's Chief Designer, Franz von Holzhausen, design philosophy that avoids a "cheap" feel and aims to deliver more value than the price suggests. But it's not clear how focused Tesla is on simply bringing out a cheaper EV. 'While many investors would rather have Tesla keep their head down and just keep making cheaper EVs, this is not at all the strategy we think Tesla will pursue going forward,' said Morgan Stanley in an April 22 research note.
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