Tesla is preparing a budget electric vehicle to boost sales in 2025

Tesla investors are pinning their hopes on a budget electric vehicle model that could help boost sales after a lackluster 2024. The company is set to release its financial results on Wednesday, and analysts are expecting details about the more affordable model, which could play a key role in achieving the target of a 30% increase in deliveries in 2025.

Amid competition from Chinese brands such as BYD, Tesla recorded its first-ever decline in annual deliveries in 2024. However, lower borrowing rates in 2025 could support a rebound in sales volume. Meanwhile, Tesla has updated its best-selling Model Y and continues to promote the uniquely designed Cybertruck to attract new customers.

The more affordable electric vehicle, slated for launch in the first half of 2025, remains a crucial part of Tesla's growth strategy. However, it is still unclear whether the new model will qualify for federal subsidies of $7,500, which could impact its net cost to consumers. Investors also worry that the new model might affect sales of the existing Model Y.

Despite these challenges, Tesla's stock has risen by more than 60% since November, fueled by expectations of regulatory easing in the field of autonomous driving. The company is currently trading at 125 times its expected earnings, emphasizing its status as a high-tech company with significant growth potential.

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