Can a Tesla Cheap EV Model Boost Sales After a Disappointing 2024?

Tesla investors are expecting the new cheap EV model from the company to help boost its sales numbers after a drop in 2024 performance. According to Reuters, on Wednesday, 29th January 2025, investors will be looking for more information on cheap EV models to know about Tesla’s plan to boost sales in 2025.

The rising competitive environment with BYD and reducing demand is driving Tesla to launch an affordable electric vehicle that will attract new customers and restore its market presence.

Although a leading force in the EV market, Tesla has had a difficult 2024 with slowing demand, price cuts, and rising competition. The global deliveries of the company have been lower than anticipated, which is making Tesla investors worried about its growth. Demand for Tesla has dipped amid the slowing EV demand and the company is set to increase its deliveries by 30% in 2025..

The automotive company is working on producing a cheap EV model suitable for the broad consumer base. An affordable EV from Tesla under development promises lower pricing than existing models which seeks to reduce EV costs and thus drive adoption across society. The launch of Tesla’s revamped Model Y has also hit the U.S. market to boost Tesla’s sales.

BYD vs Tesla

Tesla is being competitively threatened by BYD, a Chinese automobile manufacturer that has aggressively expanded its presence in the global EV market. The BYD vs Tesla rivalry has intensified as the Chinese car company continues to offer electric cars at a relatively lower cost than Tesla. In November 2024, BYD’s record-breaking sales helped the company achieve its 2024 goals.

BYD recently overtook Tesla in global EV sales, highlighting its need to work on its pricing and product strategy. According to industry experts, an affordable Tesla model is important in defending its position against BYD and other emerging competitors.

While a Tesla cheap EV model is expected to increase sales, some analysts question its impact on Tesla’s profitability. Tesla has always maintained high-profit margins by selling premium vehicles, and launching a lower-priced model could strain its production costs.

Barclays analyst Dan Levy said in a research note, ” As the opportunity for growth from Tesla’s existing lineup appears quite limited, Tesla’s new low-cost model remains crucial to Tesla’s plan for growth, even if not to the extent of the prior 20-30% y/y target.”

Cheaper Tesla To Revive Sales

The strategy that Tesla is to adopt with an economical EV may be a turning point in its growth curve. If successful, it will not only help boost Tesla sales but also make it a leader in the EV sector. However, the EV manufacturer will be facing challenges related to production cost, supply chain management, and profitability.

With Tesla investors impatiently awaiting new model updates, all eyes will be on Elon Musk and Tesla’s leadership to see how they carry this critical shift. David Wagner, portfolio manager at Tesla investor Aptus Capital Advisors, “It is unclear whether the new model will qualify for a $7,500 U.S. rebate, which could make the net cost to consumers higher, and we don’t know how different the new offering might be, and whether it might cannibalize existing Model Y sales.“