Tesla (TSLA) Soars 13.1% After-Hours on Affordable EV Promise

Tesla (TSLA) Soars 13.1% After-Hours on Affordable EV Promise

Tesla, Inc.’s TSLA shares rose 2.2% in the last session but soared 13.1% in the after-hours following its first-quarter 2024 earnings. This happened despite the electric vehicles (EV) giant missing both earnings and revenue estimates for the quarter.

Earlier in the month, there were reports that Tesla has shut down its inexpensive car project, the one that investors had been counting on for long to finally catapult it into becoming a mass-market automaker. It had been said that stiff competition from China-based EV makers flooding the market with cars priced as low as $10,000 was the primary reason behind Tesla’s decision. However, Tesla’s stock jumped after the market closed on Apr 23, after the company said it would accelerate the launch of more affordable vehicles, a far cry from scrapping these plans.

CEO Elon Musk said on the earnings call that these new vehicles could be launched by early 2025, if not later this year. Previously, he had targeted the second half of 2025 for the launch of this affordable mass-market car that is popularly referred to as “Model 2”.

This sent the company’s shares soaring despite disappointing earnings numbers for the quarter. Competition from China, recent high-profile departures and layoffs have also spooked investors. This is one of the primary reasons behind the company’s current rating of a Zacks #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Yet, since September 2023, Tesla’s share of the U.S. EV market has grown 1.3 percentage points to 51.3%. This continues to place it as the market leader during this period, during which companies like Hyundai, VW and BMW lost a sizeable chunk of their market share. All eyes will be set now on Tesla’s launch of its much-vaunted Robotaxi model on Aug 8, which would mark yet another watershed moment in EV history.

EVs have been rapidly gaining ground since the pandemic years, and it is becoming abundantly clear that they are here to stay. Consumers are gradually shifting from cars run on fossil fuels to their environment-friendly alternatives.

Whether Tesla’s fight against the Chinese tide brings about a sea-change in the EV market in general remains to be seen. It would be prudent to keep a tab on a few of its competitors to understand the scenario and decide whether to invest in the sector.

Ford Motor Company F, General Motors Company GM and Mercedes-Benz Group AG MBGAF are three other automobile majors that have emerged as the leading lights in the American EV segment. BYD Auto from China has surpassed Tesla as the global market leader in the EV segment. Ford, General Motors and Mercedes each carry a Zacks #3 (Hold) currently. In the near term, it will be essential to follow this space to check the emergence of newer, non-traditional automakers that have entered the EV space. However, the spotlight today is fixed on Tesla.

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