Elon Musk promises ‘more affordable models’ as Tesla revenue faces biggest drop since 2012

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Tesla stocks jumped on Tuesday after Elon Musk promised “more affordable” electric vehicle models following a drop in the company’s revenue in the first quarter by about nine per cent.

The company’s revenue dropped to $21.30bn from $23.33bn a year earlier, and from $25.17bn in the fourth quarter.

Prior to the stocks jumping by about 11 per cent after hours on Tuesday, Tesla’s shares were already down by over 40 per cent this year, pointing to turbulent times at the company.

Tesla’s income dropped by over 50 per cent to $1.1bn while the EV giant’s gross profits also plummeted by nearly 20 per cent in the first quarter, partly due to price cuts this year.

But the talk of new models sent the company’s shares soaring on Tuesday – a much needed boost for the EV giant amid fierce competition and falling sales.

The company has promised “new vehicles, including more affordable models” with their production expected to begin in “early 2025, if not late this year,” according to Mr Musk.

He declined to provide details of the new vehicles or when exactly they may arrive.

It is possible that the cheaper models could be stripped-down versions of older models such as the Model 3, which after recent price cuts costs around $39,000 in the US.

Reuters reported that Tesla scrapped its initial plans for a Model 2, which investors previously expected to drive the EV giant’s growth but the Tesla titan reacted to the story with a post on X saying “Reuters is lying”, without pointing out any inaccuracies.

Mr Musk said the new vehicles would blend “aspects” of a next-generation platform with the current production platform.

He promised that a simplified “unboxed” manufacturing process could bring down costs further.

“This is not contingent on a new factory or massive new production lines, it’ll be made on our current production lines much more efficiently,” the multibillionaire said.

“In terms of a new product roadmap, there’s been a lot of talk...We’ve updated our future vehicle lineup to accelerate the launch of new models,” the Tesla boss said.

When Mr Musk was asked directly by an investor where his “heart’s at” about cheaper EVs like the previously teased Model 2, the Tesla titan vaguely responded, “If you have a great product at a great price, sales will be excellent.”

“We think Q2 will be a lot better,” he added.