Tesla CEO announced plans to deliver a cheaper car of $25,000 by 2023. In reaction, Tesla stock continued its way down.
Tesla Inc (NASDAQ: TSLA) CEO Elon Musk has promised to deliver a cheaper Tesla electric car by 2023. Musk said the vehicle would be available for $25,000, making it the cheapest car the company has produced so far.
On Tuesday, Tesla held its Battery Day event, where CEO Elon Musk promised a cheaper Tesla car with Tesla-made batteries. According to the CEO, the car which would be fully autonomous would be cheaper as it would carry a Tesla-made battery.
Tesla Promises Cheaper Car
During the event, Musk revealed that the company is working on new anode and cathode technology to deliver more affordable and sustainable batteries. Notably, Tesla-made batteries should allow Tesla to manufacture cheaper electric vehicles to its customers.
Musk expressed his confidence in delivering a cheaper car:
“We’re confident we can make a very, very compelling $25,000 electric vehicle that’s fully autonomous. And when you think about the $25,000 price point, you have to consider how much less expensive it is to own an electric vehicle…”
In 2018, Musk promised that Tesla would produce a $25,000 car in three years. Now, the company has extended the delivery of the cheaper car by another three years.
Elon Musk also announced a new Model S Plaid. Ahead of its delivery in 2021, the Plaid is already listed on Tesla’s website at nearly $140,000.
Investors React to Tesla Announcement
Following Musk’s announcements on Tuesday at the Battery Day event, Tesla’s stock fell 7%. In addition, the company’s market value dropped $20 billion within two hours after trading closed on the same day. At press time, Tesla is valued at $418.75 billion.
According to a Reuters report, investors were looking forward to different announcements from Tesla. They expected an announcement on the development of a “million-mile” battery that can last at least ten years. Investors also expected Tesla to announce a cost reduction that would make an electric vehicle cheaper than a gasoline car. However, CEO Musk gave them none of these.
Ahead of the event, Musk already tweeted that the company’s new plans will not “reach serious high-volume production until 2022.”
The co-founder of Loup Ventures, Gene Munster, suggested that investors are underwhelmed with Musk’s plans. Stating that the three-year Tesla plan is a long time, Munster added:
“Everything they talked about had substance but investors wanted immediately.”
Referring to Tesla’s plan to make its batteries, Munster said that is a “flywheel that is difficult to catch.” However, he added that upon the success of Tesla-made batteries, the company would spend less on production costs, deliver cheaper vehicles and get more demand from consumers.
Currently trading at a premarket price of $401, Tesla stock is down 5.48% over its previous close of $424.23. Also, TSLA fell 1.49% over the past month and nearly 4% in the last five days. In contrast, Tesla stock surged 827.48% over the past year. Similarly, the company has added more than 407% in its year-to-date record. Tesla has also increased by 120.76% in the last three months.