Analysts and business leaders react to the new, more affordable Tesla models

• Tesla unveiled more affordable versions of the Model 3 and Model Y on Tuesday.
• The new models are roughly $5,000 cheaper and have fewer features.
• Reactions have been mixed, with Tesla’s stock down 4.45% as of market close.

Tesla on Tuesday unveiled its two most affordable electric vehicle models yet, and reactions from analysts and business leaders have been mixed.

Tesla announced its $36,990 Model 3 Standard and $39,990 Model Y Standard, which are about $5,000 cheaper than the prior models and come with fewer features.

Fans and investors have long awaited Tesla’s introduction of more affordable models, but the new models may not have been what Wall Street was looking for. Tesla’s stock dipped after the announcement, and the share price was down 4.45% at market close on Tuesday.

Here’s what analysts, investors, and business leaders have said about the new models.

Notably, Tesla CEO Elon Musk had not posted on X about the new models as of Tuesday evening, though he did post about an update to Tesla’s fully self-driving software as well as xAI’s Grok.

Dan Ives

Tesla bull Dan Ives and other analysts at Wedbush were disappointed by the announcement on Tuesday.

The analysts said in a note that the lower cost models were highly anticipated but that “this price point is still relatively high versus other vehicles on the market.”

The note also said the analysts believed the more affordable models would help boost demand, especially in light of the EV tax credit expiring, but that they were “relatively disappointed with this launch as the price point is only $5k lower than prior Model 3s and Ys.”

However, the analysts were optimistic about the FSD update Tesla also announced on Tuesday, as well as the company’s potential AI valuation in the future.

“While some might have been hoping for the Roadster announcement or a lower price point, we believe this is a step in the right direction and any knee-jerk reaction should present a buying opportunity to get into Tesla’s autonomous path forward,” the note said.

Ross Gerber

Ross Gerber, a longtime Tesla investor, was neither impressed nor surprised by the more affordable models.

“It’s another version of the Model Y, and they already launched the best Model Y they’ve ever built,” Gerber told Business Insider. “So the problem is, people are extremely price sensitive. If you have two or three or four models of the same car, which one do you think most people pick? The cheapest one.”

“So they will now perceive the brand differently because their experience with it will be different. It now becomes more like Toyota than Mercedes, when Tesla used to be considered a luxury,” Gerber added.

“Literally called it,” he said in an earlier post on X. “$7500 less good only to eat sales from higher priced models. Why? Because the tax credit got pilfered by the ceo himself.”

Gerber, CEO and president of Gerber-Kawasaki Wealth, has been critical of Tesla and Musk, with his firm dumping Tesla stock earlier this year. Gerber said in July that the expiring EV tax credit was a problem for Tesla and predicted the company’s stock would decline further, although its share price has since risen.

As of now, Gerber said he still manages around $80 million worth of Tesla shares.

Seth Goldstein

Seth Goldstein, an analyst at Morningstar, said the more affordable options should help Tesla make up for the EV tax credit expiring in September.

“I think a sub-$40,000 price will help Tesla grow deliveries as it opens the Model 3 and Model Y up to more consumers who are not able or willing to pay up for a higher-priced vehicle,” he said, according to Reuters.

Gene Munster

Gene Munster, a Tesla investor and managing partner of Deepwater Asset Management, praised Tesla for lower-priced models in an X post and suggested it would allow the company to better compete with more affordable models from competitors.

“For Hyundai, Ford, and Nissan, the challenge isn’t price, it’s software,” he said. “As Full Self-Driving and onboard compute capacity become as central to the EV experience as range, Tesla’s software advantage continues to widen.”

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