Investors and fans of Tesla have long been waiting for the appearance of more affordable electric cars of the brand, but they were met rather coolly: after the announcement of new products, the company's shares collapsed by 4.5%. Tesla announced the Model 3 Standard for $36,990 and the Model Y Standard for $39,990. Both electric cars are about $5,000 cheaper than the previous base versions, but feature a stripped-down feature set. Analysts and investors have differed in their assessment of the more affordable versions of Tesla's popular models, ranging from support for the idea of affordable transportation to criticism for the lack of new models.

What the analysts are saying

- Analyst Dan Ives and his colleagues at Wedbush reacted negatively to the new Tesla, writes Business Insider. "We are generally disappointed with this launch, as the price is only $5,000 lower than previous versions of the Model 3 and Model Y," the analysts wrote in a note to investors. Wedbush acknowledges that a more affordable Tesla could indeed drive demand after the elimination of electric vehicle tax credits in the U.S., but notes that the "price point set is still relatively high compared to other cars on the market."

Analysts, meanwhile, said investors should take advantage of Tesla's stock drop to buy it. "While some may have been counting on the announcement of the [electric sports car] Roadster or a lower price, we believe this is a step in the right direction, and any sharp market reaction should be taken as an opportunity to buy Tesla stock and join its journey toward autonomous driving," Wedbush said in a note.

- According to longtime Tesla investor Ross Gerber, the release of budget electric cars will hit sales of luxury versions in the same lineup. "It's just another version of the Model Y, and they've already put out the best Model Y ever," Gerber said. - The problem is that people are extremely price sensitive. If you have two, three or four versions of the same car, which one do you think most people will choose? The cheapest one.

- Morningstar analyst Seth Goldstine believes the affordable models will help Tesla offset the elimination of the tax credit for buying electric cars in the U.S.. "I believe a price below $40,000 will help Tesla ramp up deliveries as it makes the Model 3 and Model Y affordable to more consumers who either can't or aren't willing to pay for a more expensive car," Reuters quoted the analyst as saying.

- "Tesla's price cuts may support sales, but they emphasize the technology plateau," Ken Johnston, vice president of data, analytics and AI at Envorso, told Reuters. - The company is behaving like a classic automaker using price elasticity to capture market share in the short term. But the real problem is that it hasn't introduced a single truly new model since the Cybertruck was released. The promised Roadster and robotaxi remain concepts, not production cars. If Tesla fails to realize these projects, its massive robotics and AI ambitions will start to seem more like dreams than achievable goals."

- "The cheaper versions of the Model Y and Model 3 will really help ramp up sales, but I was certainly hoping for a more affordable Tesla in the under $30,000 price range. I'm just not sure that's enough," Sean Campbell, an advisor at Camelthorn Investments, told Reuters. - In the long run, this news won't solve the problem created by cheaper Chinese competitors in global markets."

- Releasing cheaper models makes it more likely that Tesla can achieve Wall Street's pledged 16% growth in deliveries in 2026, according to Deepwater Asset Management analyst Gene Munster. "Most were expecting a stripped-down version of the Model Y. But what we got was essentially the same Model Y, just with limited color and drive choices," Seeking Alpha cited the analyst's note.

- "We continue to believe that the entire Model 3 and Model Y lineup as a whole offers good value for money (taking into account features such as acceleration and safety), but the degree of variation in price, equipment and layout among the Standard versions was lower than we expected from Tesla's more affordable models," said Goldman Sachs analyst Mark Delaney, a note cited by Benzinga.

Delaney notes that Tesla had previously planned to release an all-new model that would cost 50 percent less than the Model 3 and Model Y. Instead, the company offered consumers only new variants of existing cars. The analyst recalled that it was the release of an affordable model that was one of Tesla's key promises at the investor day in 2023. At the same time, the company's focus on new modifications of already popular models allows Tesla to save money and bring products to market faster, Delaney emphasized.

This article was AI-translated and verified by a human editor

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