Tesla is under pressure from investors to deliver a lower-priced vehicle and address competition from Chinese EV makers. The automaker's first-ever decline in annual deliveries in 2024 has fueled concerns. Investors will be closely watching Tesla's earnings call on Wednesday for details about the rumored 'Model Q' and its plans to regain market share.
The road ahead for Tesla is a bit bumpy. With CEO Elon Musk facing scrutiny over his outspoken far-right politics and the electric vehicle brand suffering as a result, Tesla desperately needs a win. Investors are looking towards a more affordable model as the answer and are expected to press the automaker about the so-called ' Model Q ' during its earnings call on Wednesday. Here's what we anticipate.
Welcome back to Critical Materials, your daily briefing on all things electric and automotive technology. Today, we're discussing Tesla's investors seeking answers about its purported inexpensive car, a survey of European EV buyers revealing a preference for Chinese EVs over those from Elon Musk, and OEMs filing lawsuits against Europe regarding tariffs. Let's dive in. 30% : Tesla Shareholders Expected To Want Answers About Lower-Priced Model We're a month into 2025, which means automakers are finalizing last year's financial reports for investors. Soon, we'll know which companies truly flourished in 2024 and which ones need to provide some explanations. As for Tesla? Well, let's just say that investors are anticipated to demand more than just AI promises this time around. A new report from Reuters indicates that Tesla shareholders are growing impatient with Tesla's growth. In fact, Tesla reported its first-ever decline in annual deliveries for 2024—a drop of roughly 1.1% year-over-year despite the highly anticipated Cybertruck. Essentially, investors want growth, always. Numbers going up and to the right. That's up, not down. So Tesla's various promises regarding Full Self-Driving are only going so far lately. Analysts' notes ahead of Tesla's year-end earnings call suggest that investors are looking to Tesla to disclose details about its strategy to counter China's influx of lower-cost EVs, including a rumored sub-$30,000 'Model Q' reportedly confirmed to Deutsche Bank last month. Some key takeaways from Reuters: Tesla investors will seek more information about the automaker's lower-priced model when it announces quarterly results on Wednesday, as some anticipate that the cheaper car will assist the company in achieving its goal to increase deliveries by up to 30% this year. Faced with intense competition in China from BYD and other electric vehicle manufacturers, Tesla recorded its first-ever decline in annual deliveries in 2024. Analysts now predict that lower borrowing costs this year will fuel a rebound in sales volume. Tesla stated in April last year that it would launch cheaper cars based on its existing platforms and their current production lines in the first half of 2025, as part of a shift from ambitious plans to produce a completely new model that was expected to cost $25,000. Tesla is currently the world's most valuable automaker. Its stock price has also surged significantly since U.S. President Donald Trump's election victory in November, an increase bolstered by Musk directly. Currently, the brand's shares are trading at 125 times its projected earnings. (For comparison, General Motors is valued at just five times its earnings.) This valuation stems from shareholders' expectations of Tesla being more than just a car company. There's the company's energy division, which provides solar and battery storage products to customers, the robotics unit, which is developing the brand's Optimus robot (something Musk claims would make Tesla worth half of the entire S&P 500), its charging network (now serving non-Tesla brands at the company's Superchargers), and, of course, its software department focused on delivering autonomy necessary for the Tesla Robotaxi. Still, despite all these other business units, investors continue to press Tesla about its plans for the part of its business that actually generates tangible results: its cars. And that's where things get a bit tricky for Tesla. There's competition in the market. Other automakers are producing high-quality EVs in 2025, including domestic brands here in the U.S., and new up-and-coming automakers in China. In fact, Tesla's presence in China is threatened by brands like BYD, which is mass-producing inexpensive $10,000 EVs that are being eagerly purchased by the public. Tesla isn't competing in that price range, but investors are eager for Tesla to move downmarket. The Model Q—which isn't the car's official name, by the way—is Tesla's foray into that semi-affordable market. The car is expected to be built on existing technology, which isn't unusual considering the cost savings of leveraging a nearly eight-year-old platform. But that same platform could become a point of contention. Are buyers avoiding Tesla's current models due to the lack of change? Sure, the Model 3 and Y have undergone recent facelifts, but that might not be enough for buyers when other OEMs take considerably larger leaps forward between models. If Wednesday's earnings call unfolds as anticipated by outlets, Tesla could be in for a rough ride. But, if the automaker can successfully reassure investors that everything will be alright as we move into 2025, then the brand could potentially salvage its reputation
Tesla Electric Vehicles EV Market Model Q Affordability China Competition BYD Elon Musk Investor Pressure
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