Tesla rolled out new, cheaper versions of two of its electric car models on Tuesday in hopes the offerings will help revive flagging sales but investors dumped its stock anyway.
The new Model Y, costing just under $40,000 with a stripped-down interior, comes in a brutal year for Tesla as it tries to attract more customers despite an aging lineup, stiff competition from foreign EV makers and anti-Elon Musk boycotts targeting the company.
The reaction from the stock market after the news broke suggests the new models are not expected to help much.
“Investors were looking for something truly different, not an iteration of a old product,” said Edmunds analyst Ivan Drury, speaking as Tesla stock dropped sharply in the last minutes of trading. “I can’t imagine this will bring levels back to what they want.”
Tesla also announced a cheaper version of its Model 3 for under $37,000. For New York residents taking advantage of a state rebate, the price was below $35,000.
Tesla has talked about a cheaper car to appeal to more cost-conscious consumers for years, though the two new “standard” models are priced well above the $25,000 price tag promised. They come as customers are widely expected to hold off from purchases over the next several months due to the recent expiration of a $7,500 federal tax credit for electric vehicles.
Tesla stock fell 4.5% to $443.09 on Tuesday after closing the day before up more than 5% on anticipation of the new model announcement.
Compared to previous models, the new Model Y comes with a shorter 321-mile driving range, fewer audio speakers and a fabric interior, not microsuede. The model also lacks a panoramic glass roof and a touchscreen in the second row.
This model faces stiff competition in the $40,000 range for EVs from vehicles including Ford’s Mustang Mach-E, Chevrolet’s Equinox EV and Hyundai’s Ioniq 5.
The new Model 3 has also cut down on the driving range, ambient lighting and other features.
The Associated Press contributed to this report.