Tesla launches two affordable electric cars: Will it save Tesla’s dropping sales?

In a move to revamp its sales, Tesla has unveiled two cheaper versions of its flagship Model Y and Model 3, starting at $40,000 and $37,000, respectively. 

Despite new launches, Tesla's shares continued to suffer as people reacted negatively to the update. 

The drop in the shares is a result of Tesla’s inability to attract more customers to its ageing product fleet. In addition, the growing competition from foreign electric vehicle manufacturers and anti-Elon Musk narratives have played against the company’s market presence. 

As per the reaction by the stock market, the new model may not produce the expected result as intended, India TV reported. 

Citing Edmunds analyst Ivan Drury, India TV reported, “Investors were looking for something truly different, not an iteration of an old product. I can't imagine this will bring levels back to what they want”.

Although Tesla has long talked about producing a more affordable vehicle to cater to buyers on a budget, the two new "standard" variants are significantly more expensive than the $25,000 price tag that was long anticipated. Due to the recent expiration of the $7,500 federal tax credit for electric vehicles by the US government, consumers are generally expected to postpone purchases for the next few months.

Tesla, on Tuesday, witnessed a 4.5 per cent decline in shares to $443.09, which is a significant contrast to the previous day's close, when the price surged over 5 per cent in anticipation of the announcement.