Tesla Accelerates the Launch of More Budget-Friendly EVs

As a result of the rapid revenue decline in the first quarter of this year, Tesla is channeling its efforts to launch more affordable EVs sooner than expected.

On Tuesday, the electric vehicle giant said it will launch “new and more affordable products” sooner than previously planned. Initially, production was set to start in the latter half of next year.

To streamline the process, the company said the new EVs “will be able to be produced on the same manufacturing lines as our current vehicle line-up.” It added, “Ultimately, we are focused on profitable growth, including by leveraging existing factories and production lines to introduce new and more affordable products.”

Tesla experienced a rapid 9% decrease in revenue compared to Q1 of the previous year, marking its most significant decline since 2012. The company’s vehicle deliveries also saw a 9% slump, which outpaced the 2% decrease in production.

Yesterday, the electric vehicle maker also said, “Global EV sales continue to be under pressure.”

Since 2023, the company has experienced a significant decline in growth linked to weakened demand and fierce competition. During an earnings conference, Elon Musk emphasized the difficulties facing the EV industry. He attributed the challenges electric car adoption faces to the increasing preference for hybrid vehicles among consumers.

Economic challenges have made affordability a key concern for buyers, making lower-priced models more attractive. Tesla’s price reductions in 2023 have impacted its profit margin, leading to the need for a more affordable model to regain its strong market position, especially in China.

Recently, Tesla not only implemented significant price reductions in the U.S. but also announced similar cuts for China and Germany. This move coincides with the company’s struggles against declining sales and increased competition in critical global markets.

Since 2020, Musk has been saying that a $25,000 electric vehicle is attainable in the near future. At the same time, Tesla unveiled the Cybertruck, which carries a retail price that can reach six figures.

To combat its challenges, the company also resorted to reducing its workforce by 10%. In early April, Musk informed employees of this decision.