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American Focus > Blog > Economy > Tesla’s affordable EV, robotaxis in focus after Musk backlash, competition hurt demand
Economy

Tesla’s affordable EV, robotaxis in focus after Musk backlash, competition hurt demand

Last updated: April 22, 2025 12:40 am
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Tesla’s affordable EV, robotaxis in focus after Musk backlash, competition hurt demand
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Tesla investors are eagerly anticipating the upcoming earnings report from the electric vehicle giant, with two key questions at the forefront of their minds: when will the affordable vehicle be launched, and is the robotaxi plan on track?

Wall Street has high hopes for Tesla’s more affordable car, which was promised to debut by the end of the first half of this year. The expectation is that this offering will help boost Tesla’s sales, which have been facing stiff competition and backlash due to CEO Elon Musk’s controversial political views.

Recent reports have revealed that the affordable Tesla will be a stripped-down version of the popular Model Y SUV, manufactured in the U.S. However, production of this model has been delayed by several months, causing some concern among investors.

“The low-cost Tesla could be a game-changer for the company. If it turns out to be just a basic version of the Model Y, there could be disappointment in the market. Elon Musk needs to meet the deadline for this launch and deliver a compelling vehicle,” said Will Rhind, CEO of GraniteShares.

As Tesla grapples with declining sales and shrinking margins, there is a pressing need for a successful product launch to turn the tide. The company’s automotive gross margin is expected to have hit a low point in the first quarter, with analysts predicting continued pressure on margins as Tesla offers incentives to drive sales.

Tesla has indicated that leveraging existing vehicle platforms and production lines for the affordable car will help reduce capital costs. However, details on the specifics of this strategy remain scarce.

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In response to slowing demand for its current lineup and heightened competition from Chinese EV manufacturers, Musk shifted focus to the development of robotaxis and artificial intelligence. He has pledged to launch driverless ride-hailing services in Texas by June and later this year in California.

Despite Musk’s decade-long promises of self-driving Teslas, concerns persist about the safety and legal risks associated with deploying unproven autonomous technology on public roads. Tesla is actively seeking regulatory approvals necessary for the launch of its robotaxi service.

However, challenges loom over the production of the Cybercab, a critical component of Tesla’s robotaxi vision, as the company has halted component imports from China in response to increased tariffs imposed by the Trump administration.

In addition to these hurdles, there are growing doubts among investors about Musk’s ability to effectively manage the company, given his involvement in federal job cut initiatives under the Trump administration. Musk’s political affiliations have sparked protests and vandalism at Tesla showrooms, leading to a decline in brand value and an increase in trade-ins.

As Tesla prepares to release its earnings report, analysts anticipate revenue of $21.35 billion for the first quarter, driven by sales of automotive regulatory credits and energy products. The company’s automotive gross margin is expected to decline to 11.83%, excluding regulatory credits, reflecting a shift towards volume deliveries over margin optimization.

Tesla’s efforts to boost sales include heavy discounts on Cybertrucks and the recall of all units sold to address safety concerns. Analysts warn that profitability could be impacted by offers of free charging or autonomous features.

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In conclusion, Tesla’s upcoming earnings report is highly anticipated, with investors eager for updates on the affordable car launch and the progress of the robotaxi plan. The company faces significant challenges, from production delays to regulatory hurdles, as it strives to regain momentum and profitability in a competitive market.

Written by Akash Sriram, Reuters.

TAGGED:AffordableBacklashCompetitiondemandFocusHurtMuskrobotaxisTeslas
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