Elon Musk Faces Pressure from Wall Street Over Tesla’s Affordable Car

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Elon Musk Faces Pressure from Wall Street Over Tesla's Affordable Car
Elon Musk, CEO Tesla

Elon Musk hasn’t given clear answers to investors about Tesla’s plans since April 5 when a report said the company canceled its $25,000 “Model 2” electric car.

Musk posted on social media, saying, “Reuters is lying,” but didn’t explain what was wrong in the report.

Two weeks later, investors still don’t have updates from Musk, and they’re getting anxious. They want to know about the Model 2 and what Musk plans to do to improve sales as electric car demand decreases globally and competition from Chinese electric cars increases.

Tesla recently laid off over 10% of its global workforce and some senior executives, which made shareholders worry more.

The analysts at Wedbush Securities said investors need clear answers during Tesla’s earnings call on April 23. They want to hear about Tesla’s “strategic vision” and how the Model 2 fits into it.

Dan Ives, a senior analyst at Wedbush, said Musk’s silence about the Model 2 is concerning for Tesla investors because it’s crucial for the company’s growth.

Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management and a Tesla investor, said Tesla needs to release the Model 2, or there’s no point in investing in the company.

Tesla and Musk haven’t responded to requests for comments about the Model 2 or the April 5 report.

Investors are also curious about another part of the April 5 report: that Tesla plans to focus on self-driving taxis instead of the Model 2.

Elon Musk Faces Pressure from Wall Street Over Tesla's Affordable Car
Tesla Shop (Credits: Tesla)

Musk’s social media post on the same day hinted at a Tesla Robotaxi revealing on August 8, but he didn’t provide details. Industry experts think it’s unlikely Tesla will have a self-driving car ready so soon.

Since the April 5 report, some investors have liked the idea of Tesla focusing on self-driving taxis instead of the Model 2. Musk’s posts helped Tesla’s stock recover from a 6% drop after the report.

But investors are still unsure about Tesla’s future plans and when they’ll happen. Tesla’s stock has dropped more than 45% since July.

Tesla is still the most valuable carmaker globally, with a market value of about $500 billion, higher than Toyota’s.

Without clear answers from Musk, analysts are uncertain about Tesla’s growth. Deutsche Bank said they’re waiting for clarity from Tesla. If Tesla cancels the Model 2, it would change investors’ views on the company’s future.

Some investors think focusing on self-driving taxis is a good idea. Gene Munster, managing partner at Deepwater Asset Management, said it could make Tesla a leader in transportation. But Jake Bleicher, portfolio manager at Carson Wealth Management Group, said Musk needs to show progress by August, as he promised. If not, investors will be worried.


By Preksha Sharma

being me means you've got to love cars, coffee and gilmore girls. sorry i don't make the rules.

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