Tesla Inc. shares experienced a decline on Monday due to the postponement of plans for an affordable version of its Model Y SUV.
Reasons for the Decline
According to sources, Tesla has delayed the launch of a U.S.-made, stripped-down version of its Model Y, which was originally planned for the first half of the year. The production of the lower-cost version, codenamed E41 internally, is expected to begin at least a few months later than previously forecasted. New timelines suggest the affordable model could enter production sometime between the third quarter and early next year.
Production Plans
People familiar with the matter reported that Tesla was aiming to produce 250,000 stripped-down Model Ys in the U.S. in 2026. The company also plans to produce the vehicle in China and Europe eventually. The vehicle is expected to cost about 20% less to make than the latest refreshed version.
Global Trade Tensions
The delay comes amid rising global trade tensions following the Trump administration’s sweeping reciprocal tariffs on a slew of nations. However, the sources didn’t provide a reason for the delay.
Model 3 Sedan Plans
Tesla is also planning to launch a basic version of its Model 3 sedan. CEO Elon Musk previously said the company would offer vehicles priced as low as $25,000, but he suggested the company had shifted its focus to robotaxi development instead.
Upcoming Earnings Report
Tesla is due to report first-quarter financial results after the market close on Tuesday. Analysts expect the EV maker to report earnings of 41 cents per share and revenue of $21.35 billion.
Stock Performance
Tesla shares were down 5.29% at $228.45 at the time of publication Monday. The company reported its first decline in annual deliveries at the beginning of the year, and analysts expect annual sales to decline again in 2025.
Tariff Exposure
Automakers are facing higher prices and potential supply-chain disruptions due to tariffs. However, Tesla has ramped up North American parts sourcing in recent years, which could lower tariff exposure for the lower-cost Model Y.
Conclusion
The delay in the launch of the affordable Model Y has contributed to Tesla’s stock decline. The company’s upcoming earnings report and plans for new vehicle models will be closely watched by investors and analysts.