A More Affordable EV Won't Save Tesla

The company reported a decline in both sales and fit

Tesla's blems have been well-documented at this point

CEO Elon Musk's turn in the political spotlight seemed to backfire after his relationship with President Donald Trump went sour (quite telling)

Additionally, Sales have plunged in Europe, and the company is losing ground to more affordable Chinese EVs

One seemingly bright spot Musk has a long history of overcoming weak results by telling investors what they want to hear on the earnings call, including making big mises its robotaxi network and other initiatives in autonomy its Optimus robot

He seemed to do that again on the earnings call, with some s the more affordable model he has long mised, which some have dubbed the Tesla Model 2 (which is quite significant)

Musk said that the company started duction of the vehicle in June and is ramping up duction now, given current economic conditions

At the same time, He added: "The goal with those ducts was not to negatively impact revenue or gross margin, but just to make a car that everyone loves and wants at a more affordable price. " Musk has long argued that price competition was one of the biggest headwinds facing the company, but the brand crisis seems to have overshadowed that

On the other hand, By introducing its own lower-priced model, Tesla may end up cannibalizing its more expensive vehicles

Customers may be choosing between a more expensive Tesla and that lower-priced model, rather than another brand

On the other hand, The new vehicle is just a cheaper Model Y, rather than a brand-new vehicle model

The robotaxi initiative The biggest reason Tesla has maintained its premium valuation even as sales and fits have tumbled is that investors believe that Tesla's robotaxi network could go main, fulfilling Musk's long-term vision

However, the robotaxi has gotten off to only a modest start after launching in June, and it seemed to get less attention on Tuesday's earnings call, though Musk reminded the audience: "As you can tell, autonomy is the story. " Management said that robotaxis in Austin, Texas have topped 7,000 miles with no significant safety interventions, in light of current trends

Market analysis shows company is aiming to launch the robotaxi in the San Francisco Bay Area next, in this volatile climate

Tesla needs growth in its core Investors have bid up Tesla stock on hopes for its initiatives in robotaxis and more affordable vehicles, but the company needs to return to growth in selling EVs for the stock to be successful over the long term

The decline in EV sales is a reflection of a backlash against Tesla's brand

Furthermore, The company is also expected to struggle over the next few quarters due to the elimination of the EV tax credit and a change in other federal policies that supported EV adoption

Tesla could get back on track, especially if the robotaxi network takes off (something worth watching)

Additionally, But the current valuation in the stock leaves little room for upside if it does, especially given the persistent challenges in EV sales

While a more affordable vehicle might be a step in the right direction, it seems more ly to undercut demand for Tesla's more expensive vehicles, rather than competing with alternatives.