Key Stats for Tesla Stock
- Price Change for $TSLA stock: -4.5%
- Current Share Price: $433
- 52-Week High: $488
- $TSLA Stock Price Target: $351
What Happened?
Tesla (TSLA) stock dropped 4.5% on Tuesday after the company unveiled cheaper versions of its Model Y SUV and Model 3 sedan.
The new Model Y standard starts just below $40,000, while the Model 3 standard begins around $37,000. Both are roughly $5,000 less than the previous entry-level versions.
The stock had jumped 5% on Monday as Tesla teased the announcement with cryptic videos showing a spinning component and vehicle headlights.
Many hoped for updates on other products like the long-promised next-generation Roadster that CEO Elon Musk has been talking about for years. Instead, they got stripped-down versions of existing cars.
The new Model Y standard lacks the panoramic glass roof, leather seats, and light bars found in higher-end versions. It also has less range, getting 321 miles per charge compared to 357 miles in the Long Range rear-wheel-drive version.
The timing matters because federal EV tax credits worth up to $7,500 expired at the end of September under President Trump’s spending bill. Tesla’s new lower-cost models try to offset that loss, but the $5,000 price cut doesn’t fully make up for the missing tax credit.
Tesla has been wrestling with narrowing profit margins in recent years due to falling vehicle prices, elevated interest rates and competition from legacy and new auto manufacturers.
Tesla also released a new version of its Full Self-Driving (Supervised) driver assistance system on Tuesday. But that update didn’t generate much excitement either.
The company hasn’t released a genuinely new model since it started shipping the Cybertruck in late 2023.
That angular steel pickup never achieved the popularity of the Model 3 or Model Y and has been recalled at least eight times in the U.S.
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What the Market Is Telling Us About Tesla Stock
The muted reaction to Tesla stock shows investors wanted much more from the EV maker. The company faces mounting challenges on multiple fronts as sales fell 12% in Q2 to $22.4 billion, the biggest drop in at least a decade. Moreover, vehicle deliveries plunged 14% during that same period.
Some of that weakness comes from consumer backlash against Musk’s political activities and controversial statements. But it’s also because Tesla’s vehicle lineup is aging and competition is intensifying from companies like Volkswagen and Chinese automaker BYD.
Morgan Stanley analyst Adam Jonas warns that 2026 “could be a pretty dreadful year for EVs in this country.”
Wharton School expert Eric Bradlow notes that “consumers considering an EV or hybrid are more pragmatic and cost-conscious than current EV owners.”
Revenue is expected to fall nearly 5% this fiscal year before rebounding with projected 20% growth next year. But if the tax credit elimination hits harder than expected, those 2026 forecasts could prove too optimistic.
Some buyers likely accelerated their purchases to grab the tax credit before it expired in September. That could make next quarter’s numbers look decent but set up disappointing results in following quarters once that pull-forward demand disappears.
Tesla stock lost 36% of its value in the first quarter before jumping 40% in the third quarter. Musk himself bought about $1 billion of Tesla shares in mid-September, which helped boost the price. The stock is now up 12% for the year.
But Tuesday’s 4.5% drop suggests investors are losing patience. Musk has been trying to shift attention to Tesla’s future as a robotics and self-driving car company. He’s promised robotaxis for nearly a decade and touted humanoid Optimus robots that could work in factories or babysit kids.
Meanwhile, competitors like Alphabet’s Waymo are already operating commercial robotaxi services, and companies like Agility Robotics are selling humanoid robots today.
For now, Tesla remains heavily dependent on selling actual cars. The new cheaper models might attract some buyers, but they’re not the game-changing products investors were hoping for. Until Tesla delivers something truly new, the stock will likely stay under pressure.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
