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Tesla’s new low-cost model is likely to offer sizable savings, notwithstanding the possibility of the Trump administration axing the $7,500 federal EV tax credit.
To wit, Cantor Fitzgerald analyst Andres Sheppard believes Tesla will price its new low-cost model, due for launch in H1 2025, at around $30,000, inclusive of US federal EV tax credits. This means that the vehicle would cost ~$37,500 without this critical federal incentive.
For comparison, the base version of the Model 3 (LR RWD) currently starts retailing at $44,130. As such, the new model is expected to be around 32 percent cheaper than the base version of the Model 3 in the US.
The upcoming lower-cost models are expected to bear the same form factor as Tesla’s existing models, but stripped to the proverbial bone. According to Future Fund’s Gary Black, these models will not expand the TAM for Tesla. Instead, these new offerings will likely eat into Tesla’s overall margins.
Of course, Sheppard has also identified a veritable host of upcoming bullish catalysts for Tesla, which include the “rollout of FSD in China (started in 1Q25), [the] rollout of FSD in Europe (we expect 1H25, pending regulatory approval), high volume production of Optimus Bot (2026E), initial deliveries of Optimus to customers (we expect 2027E), and [the] introduction of the Semi Truck (we expect SOP in 2026 and for TSLA to enter the self-driving trucking industry).”
The analyst goes on to note:
“Overall we continue to see future revenue upside from FSD, Robotaxi, Energy Storage & Deployment, and Optimus Bots to be fundamental to TSLA’s thesis over the long term. However, we expect some near-term headwinds due to macro conditions, tariffs, Musk’s polarizing politics, and the likely removal of the EV Tax Credit (we expect in 4Q25/2026).”
Meanwhile, as we noted recently, Tesla is currently expected to deliver only 355,000 EVs in the ongoing second quarter of 2025, as per the bets on the Kalshi platform.
For context, do note that Tesla delivered just 336,681 units in Q1 2025 against a production level of 362,615 units. Elon Musk had blamed factory retooling for the new Model Y as a contributing factor to Tesla’s decelerating sales momentum ahead of the Q1 delivery report.
