By Tesla stock (ticker: TSLA) is aiming for its fifth consecutive day of gains, providing some respite for investors amidst recent volatility. The introduction of news about Tesla’s upcoming electric car is driving the early-week surge in share prices.
In premarket trading on Monday, Tesla stock rose by 1.5% to reach $223.30, while S&P 500 and Nasdaq Composite futures saw increases of 0.2% and 0.3% respectively.
The excitement among investors stems from reports originating from Germany regarding a new Tesla electric vehicle that will be priced at around 25,000 euros or $27,000.
Both investors and EV enthusiasts have long anticipated a smaller, more affordable Tesla model. Although no official name has been announced, it has come to be known as the Model 2 within investor circles. Tesla’s first mass-market vehicle, the Model 3, was released in 2017 after the initial shipping of the higher-priced Model S sedan and Model X SUV.
While Tesla has not commented on these plans, reports suggest that the new vehicle’s frame will be cast rather than welding various metal parts together. This innovative manufacturing method, already utilized by Tesla in its German and Texan plants, has the potential to reduce production costs.
In 2019, just before the launch of the Model Y, Tesla introduced its ambitious Cybertruck project. The company opted for a larger vehicle in order to tap into the lucrative North American pickup truck market before subsequently targeting a smaller model.
The Cybertruck: A Building Challenge and Future Profit Potential
The highly-anticipated Cybertruck, set to be shipped to customers this month, has presented significant challenges during its production. Although CEO Elon Musk has acknowledged that it won’t contribute to profits in the near future, it still holds immense promise. However, while Tesla focused on developing the Cybertruck, it faced a setback in the Chinese electric vehicle (EV) market.
As the demand for smaller and more affordable EVs soared in China, Tesla’s absence from this market segment allowed Chinese EV maker BYD to step in and claim the leading position. BYD’s broader range of EV offerings gave them a significant advantage over Tesla.
There is limited information available regarding the design and timeline of Tesla’s anticipated $27,000 EV. Despite this, investors are aware of its impending release as Musk has mentioned it on various occasions recently.
These reports have already had a positive impact on Tesla’s stock. After a turbulent October that saw shares drop by 20%, closing the month at $200.84, the anticipation of a new car has sparked optimism among investors. The stock even dipped below $200 on October 30 for the first time in months, partially due to disappointing third-quarter delivery figures and earnings results.
The introduction of a new vehicle has the potential to dispel any lingering doubts and disappointments, offering investors a glimmer of hope and renewed confidence.
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