Tesla is "involuntarily"
Remove the car logo, cut the light strip, cancel the sunroof, use a manual steering wheel... Many netizens complained that this is not Tesla's "affordable model" at all. It's clearly an expensive and shabby "tin car".
Recently, the long - rumored budget - friendly Tesla models finally made their debut. Tesla officially launched the Model Y Standard and Model 3 Standard in the North American market, with starting prices of $39,990 (approximately RMB 285,000) and $36,990 (approximately RMB 264,000) respectively. These are the "cheapest new Tesla cars in history".
However, consumers are not buying it. They describe these two standard models as "shell apartments", believing that Tesla has cut almost all the already limited configurations. Consumers expect a Tesla with a lower price, not fewer configurations.
The capital market also voted with its feet. On the day of the new car launch, Tesla's US stocks fell by 4.45%, evaporating approximately $67 billion in market value overnight.
In the past few years, Tesla has almost used "price cuts" as the only means to compete in the domestic new - energy vehicle market. Although this strategy has been effective, it has also put Tesla in a strange cycle: the more it cuts prices, the more it exposes its own difficulties. As Tesla drifts further away from the halo of a "technology leader", why should consumers pay for it?
The More It Cuts Prices, the More It Gets Criticized
Overall, the two standard models launched by Tesla in the North American market have reduced their prices by cutting some features.
A car blogger compiled the list of feature cuts for the Model Y Standard. In addition to reducing in - car configurations and functions, the car's range has "shrunk", and it is not equipped with Tesla's Autopilot advanced driver - assistance system. It only comes with a traffic - aware cruise control system.
This is also the reason why consumers are disappointed. After all, people expected the budget - friendly version to be "a good car at a low price", but the Model Y and Model 3 Standard have nothing to do with "cost - effectiveness".
Tesla's interior has always been known for its simplicity. Even the regular models are jokingly referred to by netizens as "shell apartments". Now, the standard models have almost cut all the configurations that can be cut and are criticized by netizens as "tin shacks" - with almost zero configurations, leaving only the basic functions of the car.
However, even though the standard models are so "shabby", their prices can't really be called "cheap". The decline in Tesla's stock price after the new car launch also means that the capital market is not optimistic about these two new models.
On the one hand, the pricing of the standard models is rather awkward. A securities analyst pointed out that they are only about $5,000 cheaper than the premium models (Tesla has renamed its existing Model Y and Model 3 models as premium models). Such a price cut is far from enough to offset the negative impact caused by the feature cuts.
For consumers, although the price has dropped, compared with the reduced configurations, it may not be "worth the price difference". The price cut of the standard models is not large enough to stimulate new demand on a large scale and may even weaken the brand's own premium ability.
On the other hand, Tesla has become "addicted to price cuts", but each price cut is just like "drinking poison to quench thirst", ultimately hurting its own profits.
In the first half of 2025, Tesla's revenue reached $41.83 billion, a year - on - year decrease of 10.6%. Its net profit was only $2.327 billion, a year - on - year plunge of 30%.
However, in terms of per - vehicle profit, in the second quarter of this year, Tesla earned an average of $5,700 per car, a significant decline compared to the figure of $13,000 per car in 2021, and it is even lower than that of many Chinese automakers.
(Source: Miaotou APP)
Before 2023, Tesla's gross profit margin was consistently maintained at a very high level of 20% - 25%. In the first half of this year, its gross profit margin was only 16.81%, which means that Tesla's room for further price cuts is limited. It is foreseeable that if Tesla further launches budget - friendly models, it will only continue to erode its own profit margin, which is also a concern of the capital market.
Even so, Tesla still can't stop relying on the price - cut strategy. The most direct reason is that Tesla must defend its cost advantage through economies of scale.
The automobile manufacturing industry follows the typical logic of "scale determines cost". Fixed expenditures such as factory investment and technology R & D are involved. Only by continuously increasing sales volume can the cost be effectively diluted. In addition, a large sales volume also enhances an automaker's bargaining power with upstream suppliers.
In addition, Tesla faces challenges of varying degrees in major global markets. Among them, the rise of Chinese automakers has had the greatest impact.
Against the backdrop of Chinese automakers openly competing on "cost - effectiveness", Tesla's brand advantage is constantly being diluted. It is difficult for Tesla to maintain its market share with its existing product portfolio, and "price cuts" have become a last - ditch choice.
The "Overdrawn" Brand Value
However, although "cutting prices to boost sales" seems reasonable, consumers may have different feelings.
As a pioneer in the new - energy vehicle field, Tesla is not just an automaker but also a symbolic "technology symbol". It can continuously attract a group of consumers who identify with Tesla's brand concept. They don't mind the reduced configurations and are buying the "Tesla" brand. As long as the price of Tesla drops to an attractive level, most people will probably choose it without hesitation.
On the other hand, Tesla's frequent price cuts have also made many consumers worry about "the price dropping right after they buy". Especially, Chinese consumers generally have the psychology of "buying when prices are rising, not falling", which has led many potential customers to hesitate and even lose trust in the brand.
Rose Gerber, the CEO of Gerber Kawasaki Wealth & Investment Management, a long - term investor in Tesla, pointed out that "Tesla is becoming more and more like Toyota, rather than Mercedes - Benz."
It can be seen that Tesla's deepest - seated problem is not about "whether to cut prices" but that the more it cuts prices, the more it exposes the lack of innovative highlights in its products. Before the next breakthrough product that can support the brand value appears, Tesla can only keep over - drawing on its brand value.
Previously, the Model Y was regarded as the "blockbuster product" that Tesla pinned high hopes on. Data shows that in 2024, Tesla delivered more than 657,000 vehicles in China, of which the Model Y accounted for more than 70%.
Since the beginning of this year, "modifying and transforming" the Model Y has become one of Tesla's important product strategies. For example, there is the "Standard" version in the North American market, the "Long - wheelbase" version in the domestic market, and a major facelift after a six - year interval.
Making improvements within the existing framework is a crucial step for Tesla to "turn things around". It can try to attract more users in niche markets with lower - cost modifications.
For example, the Model YL, which targets family users, can better meet the personalized needs of family users for space and seats. Although the official has not released sales data, the longer delivery cycle shown on the official website for the Model YL means that there may be more bookings.
However, at present, both the Model YL and the Model Y Standard, as modified versions of the Model Y, are inevitably limited by the original vehicle framework, and there is not much room for modification.
In addition, according to 36Kr, the Model Y Standard is expected to enter the Chinese market next year, with internal codes E41 and D50. This also means that at least until next year, Tesla doesn't seem to have any plans or reserves to launch a revolutionary product.
Judging from the sales performance, these minor modifications are unlikely to reverse the overall situation. In the first three quarters of this year, Tesla delivered approximately 1.2178 million vehicles globally, showing a downward trend.
Tesla's product portfolio is showing signs of fatigue, and the pace of new product launches has been slow. In contrast, the model iteration cycle of Chinese automakers has been shortened to 1.3 years, and the gap between the two is becoming more and more obvious.
Counterpoint Research predicts that Tesla's global market share will drop to 13% in 2025, and even to 7.6% in the Chinese market. How long Tesla can hold on with its existing product portfolio remains to be seen.
Elon Musk's Gamble
Even so, Tesla is still very strong. In the first three quarters of this year, Tesla ranked second in global electric vehicle sales, only after BYD. Among them, the Model Y remains the best - selling electric vehicle model globally in the first three quarters.
Although the Model Y has been criticized for being "outdated", its competitiveness in the global market is indeed strong. As long as the Model Y maintains strong sales, Tesla's position in the global market is difficult to be overturned.
This is also sufficient proof of the accuracy of Elon Musk's product strategy when he led the development of the Model Y. From another perspective, the current lack of innovation in Tesla's automotive business is also closely related to Musk's shift in focus in recent years.
In April this year, according to foreign media The Information, Musk discussed with Tesla executives in an internal meeting whether to cancel the affordable Model 2, which was expected to be priced as low as $25,000. However, the discussion ended in disagreement.
Tesla employees said that Musk seems to have lost interest in building cars. Strictly speaking, he has no interest in creating a mass - market vehicle. Since two years ago, Musk's attention to automotive R & D has gradually decreased.
Looking at Musk's exploration in the technology field in recent years, he is clearly more willing to be a "pioneer" rather than a "follower", even if he is following his own established territory.
In September this year, Tesla released the "Master Plan Part 4", proposing to build a highly technologically forward - looking ecosystem centered around AI large - model capabilities, covering areas from autonomous driving to humanoid robots, from energy networks to space programs.
Musk said at the press conference: "Our AI can not only drive a car but also understand human intentions. This is a real breakthrough." In fact, in recent years, Tesla's innovative businesses, whether in the automotive field or other sectors, are basically driven by AI.
In June this year, Tesla's driverless taxi, the CyberCab, was officially launched for trial operation in the United States. The computing power and perception system of this project are all based on Tesla's self - developed AI hardware.
In October, Tesla pushed the FSD V14 version to North American users. This update integrated the core algorithm achievements of Tesla's Robotaxi project and is regarded by the industry as a key step for Tesla towards L4 - level autonomous driving. In addition, Tesla's humanoid robot, Optimus, also plans to launch its third - generation product by the end of 2025 and start mass production in 2026.
All signs indicate that Musk is currently immersed in his technological dream. By building a business model that integrates "cars - robots - AI" and upgrading cars to intelligent terminals with autonomous driving capabilities, the automotive business has quietly shifted from being the "core protagonist" to the cornerstone supporting Musk's dream.
Therefore, Musk is no longer obsessed with the innovation of automotive products themselves. He even removed the car logo. Instead, he values using cars as a fulcrum to drive the diverse application scenarios of AI technology and make cars the link that connects the entire technology landscape.
In September this year, Tesla's board of directors proposed a new ten - year compensation plan for Musk, which includes four important goals: delivering 20 million Tesla cars; having 10 million active FSD subscribers; delivering 1 million humanoid robots; and operating 1 million Robotaxis.
To some extent, this compensation plan is also an attempt to ease investors' concerns about Musk's excessive "distraction". Compared with far - reaching space adventures, the board hopes that Musk will focus his energy on Tesla's core business, which is tangible and quantifiable.
After all, in the process of Musk "chasing his dream", Tesla's automotive business is still the most important "cash cow". It can provide both data and scenario support for FSD iteration and the large - scale operation of Robotaxis, and it cannot afford to fail.
Ten years ago, Tesla redefined the automobile with a sense of technology and future. Ten years later, Tesla hopes to become a disruptor in the era of artificial intelligence once again.
However, in this new battlefield, whether Tesla can replicate its past success depends not only on its business strategy but also on regaining the core that once made it great - the courage to break through industry boundaries and challenge technological ceilings.
This article is from the WeChat official account "Bohu Finance", author: Kaikai. Republished by 36Kr with permission.