The road ahead for Tesla is a bit rocky. With a CEO facing scrutiny over his vocal far-right politics and the electric vehicle brand suffering because of it, Tesla needs a win. Investors are pointing towards a more affordable model being the answer and are expected to grill the automaker over the so-called “Model Q” during its earnings call on Wednesday. Here’s what we expect.
Welcome back to Critical Materials, your daily roundup for all things electric and automotive tech. Today, we’re chatting about Tesla’s investors looking for answers on its supposed cheap car, European EV buyers surveyed say they’d rather buy a Chinese EV than give Elon Musk their money, and OEMs file suit against Europe over tariffs. Let’s jump in
30%: Tesla’s Shareholders Expected To Want Answers About Lower-Priced Model
Photo by: Tesla
We’re a month into 2025, which means that automakers are wrapping up last year’s financials for investors. Soon we’ll know just who the real winners of 2024 were, and which ones have some explaining to do. As for Tesla? Well, let’s just say that investors are expected to demand a bit more than just AI promises this time around.
A new report from Reuters signals that Tesla shareholders are growing impatient with Tesla’s growth. In fact, Tesla reported its first-ever decline in annual deliveries for 2024—a slip of around 1.1% year-over-year despite the hotly-anticipated Cybertruck.
Basically, investors want growth, always. Numbers up and to the right. That’s up, not down. So Tesla’s various promises around Full Self-Driving are only going so far lately.
Notes from analysts ahead of Tesla’s year-end earnings call suggest that investors are looking to Tesla to spill the beans about its answer to China’s influx of lower-cost EVs, including a rumored sub-$30,000 “Model Q” reportedly confirmed to Deutsche Bank last month.
Some takeaways from Reuters:
Tesla investors will look for more details on the automaker’s lower-priced model when it reports quarterly results on Wednesday as some expect the cheaper car to help the company hit its goal to increase deliveries by up to 30% this year.
Faced with intense competition in China from BYD and other electric vehicle makers, Tesla in 2024 recorded its first-ever decline in annual deliveries. Analysts now expect lower borrowing costs this year to fuel a rebound in sales volume.
Tesla said in April last year that it would launch cheaper cars based on its current platforms and their existing production lines in the first half of 2025, as part of a pivot from ambitious plans to produce an all-new model that had been expected to cost $25,000.
Tesla is currently the world’s most valuable automaker. Its stock price has also risen significantly since U.S. President Donald Trump won the election in November, an effort buffed by Musk directly. Now, the brand’s shares are trading at 125 times its expected earnings. (For comparison, General Motors is valued at just five times its earnings.)
That value comes from shareholders’ expectations of Tesla being more than just a car company. There’s the company’s energy arm, which supplies solar and battery storage products to customers, the robotics unit, which is working on the brand’s Optimus robot (something Musk claims would make Tesla worth half of the entire S&P 500), its charging branch (now serving non-Tesla brands at the company’s Superchargers), and, of course, its software department which is focused on delivering autonomy necessary for the Tesla Robotaxi.
Still, despite all of these other business units, investors keep grilling Tesla over its plans for the part of its business that is actually producing tangible results: its cars. And that’s where things get a bit sticky for Tesla.
There’s competition in town. Other automakers are producing quality EVs in 2025, and that includes domestic brands here in the U.S., and new up-start automakers in China. In fact, Tesla’s presence in China is threatened by other brands like BYD which is pumping out cheap $10,000 EVs that are gobbled up by the public. Tesla isn’t competing in that space, but investors are eager for Tesla to move downmarket.
The Model Q—which isn’t the car’s official name, by the way—is Tesla’s foray into that semi-affordable market. The car is expected to be built on existing tech, which isn’t out of the norm considering the cost savings of building on a nearly eight-year-old platform. But that same platform could prove to be a contention point. Are buyers avoiding Tesla’s incumbent models because of the lack of change? Sure, the Model 3 and Y have undergone recent facelifts, but that might not be enough for buyers when other OEMs take considerably larger leaps forward between models.
If Wednesday’s earnings call goes as outlets expect it to, Tesla could be in for a rough ride. But, if the automaker can pull off reassuring investors that everything will be okay going into 2025, then the brand could potentially save face. One thing is clear, though: the booming EV market is now a combat zone and Tesla’s arsenal is stretched thin.
60%: Buyers Would Rather Buy A Chinese EV Over Tesla Because Of Elon Musk
Photo by: InsideEVs
Once upon a time, Elon Musk’s name alone could sell an EV. Musk wasn’t just the face of Tesla, he was the whole vibe. Think Tony Stark meets early Henry Ford, but sprinkle in a bit of rocket-launching mad scientist in the mix. He could do no wrong. However, it seems that the combination may have aged a bit poorly, as Musk’s recent political antics have done more to push folks away from the Tesla brand and towards Chinese EVs.
A new study of 1,000 would-be EV buyers from Electrifying.com reveals that 59% of respondents say that Musk’s recent influence has become a “dealbreaker” in their search for a new car.
Musk has been under fire quite a bit recently, so it’s hard to pinpoint exactly which shenanigan may have pushed buyers over the edge. It could have been Musk’s call to end EV subsidies, his so-called “odd-looking” salute at the Presidential inauguration, or perhaps protests over FSD claims. Even Poland’s Minister of Sports and Tourism called for citizens to completely boycott Tesla over Musk’s support of a right-wing German political party.
The point is that there’s no single reason why people might be avoiding Tesla while Musk is at the helm, but it’s clear that while Musk is still the face of the brand, some folks are going to explore other options. And for those that already own Teslas? Well, they might be distancing themselves from the brand soon enough, too.
Young folks are more aware of Chinese EV brands than ever, and new car buyers are chomping at the bit to buy one. In fact, 61% of current EV owners surveyed and 56% of new EV buyers say they would be open to purchasing a Chinese EV. Kind of impressive when you think about it—but whether that’s the Streisand effect in full force or simply buyers knowing they have options isn’t quite certain.
The question isn’t whether or not Tesla’s cars are good; they are. It’s whether or not Elon can stop being his own worst enemy. Competition is mounding for Tesla. Newer EV brands from China like BYD and Xiaomi are making waves in one of Tesla’s largest markets, and even legacy OEMs are stirring the pot back home.
90%: Tesla, BMW And Chinese EV Makers Take Europe To Court Over Tariffs
Photo by: BMW
Some of the world’s largest automakers are teaming up to take on the European Union. Europe’s recently-imposed tariffs on Chinese-built EVs aimed at preventing foreign automakers from flooding the country with cheaper cars. But those tariffs are a double-edged sword for automakers U.S. and EU-based companies that happen to use China as a means of production.
Tesla and BMW are among the larger U.S.-market brands that filed suit against the EU. Chinese brands BYD, Geely, and SAIC have also joined in on the fun, filing lawsuits against the tariffs at the Court of Justice of the European Union (CJEU) ahead of the deadline to challenge the new rule.
Here’s the briefing from Bloomberg:
The EU’s General Court’s website shows the two EV makers made unspecified challenges against the European Commission last week.
[…]
The EU imposed anti-subsidy tariffs of 7.8% on Tesla on top of the 10% levy. BMW’s imports were hit with a 20.7% duty.
MG’s state-owned parent SAIC was hit hardest, with tariffs that now total 45%. Long the top-selling Chinese carmaker in Europe, the once-British sports-car brand has faltered recently, logging a 58% drop in registrations in November, based on data provided by Jato Dynamics, another research firm.
Yes, you read that right. Even Tesla, which has the lowest possible tariff rate of just 7.8% (compared to some of its competitors at a whopping 37.6%), is challenging the EU’s new duty fees.
Why, you ask? Well, it all just boils down to principles—or, maybe just margins. The argument made by the EU is that China provides “unfair subsidies” to vehicles produced within its borders. This leads to extremely affordable EVs that some U.S. and EU-based automakers simply can’t compete with. But for Tesla, which produces some of its EVs for the European market in China, tariffs are eating into its bottom line.
BMW, which imports EV versions of vehicles sold under its Mini brand, argued that these tariffs “harm [the] business model of globally active companies,” and “do not strengthen the competitiveness of European manufacturers” as they were intended to.
“As stated before, it is important to avoid a trade conflict that only has losers in the end,” wrote BMW in a statement to Bloomberg.
This particular battle could take a while to play out. Cases filed with the CJEU can take around 18 months, on average, to be resolved, and the decisions can be appealed. This means that for the next year and a half—or longer—there’s going to be a lot of chatter on trade agreements, fairness, and geopolitical turmoil surrounding EVs. And as for the consumers, well, those tariffs aren’t going anywhere unless the EU and China come to some sort of agreement.
100%: Can A Cheap Tesla Pull Tesla Out Of A Tailspin?
Photo by: Tesla
No matter how you feel about Musk, it’s easy to see that his presence has put Tesla in an awkward position. His face is inexplicably linked to the brand’s high stock value while simultaneously driving away would-be customers and outspoken owners. As deliveries show signs of slowing and other brands are picking up the slack, Tesla is facing a potential tailspin that could spell uncertainty for a brand with historic financial success.
This brings us to the “Model Q.” This supposed car is Tesla’s answer to the promise it pledged long ago: mass affordability. But it’s a downstream market that Tesla may not want to enter, as there’s the potential for a lower profit margin per vehicle which could mean that Telsa needs to sell more vehicles while simultaneously investing in its service operations and charging network at scale. This time, potentially without government subsidies to back things up. As the Notorious B.I.G. once so eloquently put it, “mo money, mo problems.”
So would a cheap sub-$30,000 car help Tesla, or just complicate things amid more global competition? Let me know your thoughts in the comments.
