Tesla has announced plans to launch cheaper cars as the company faces a slump in sales and profits. The electric car firm told investors it had started building “first builds of a more affordable model” in June, despite posting a decline in car deliveries and shrinking profits.
The move comes after Tesla faced cuts to US government support for electric cars, competition from Chinese carmakers, and a dent to its brand due to Elon Musk’s controversial political activities. The company reported a 12% drop in sales to $22.4 billion, the largest decline in at least a decade, with profit shrinking by 16% to $1.1 billion.
Musk expects the company’s sales in Europe to increase once customers there are allowed to use its self-driving software, with the first approval expected to come from the Netherlands. However, the firm is struggling to regain momentum after Musk’s support for Donald Trump helped him win the White House, and their subsequent falling out has soured relations.
Tesla’s share price has fallen 30% since last year, and investors are concerned about the company’s future prospects. Elon Musk’s decision to leave the Trump administration was seen as a positive development, but his continued involvement in politics has kept investors on edge.
The launch of cheaper cars is expected to be a key step in helping Tesla regain its market share, but analysts say it may not be enough on its own. “It will help, but it’s got to be more than just another car,” said Daniel Binns, global chief executive of brand consultancy Elmwood.
Source: https://www.bbc.com/news/articles/cqjq51vvello