• Tesla unveils cheaper versions of Model Y and Model 3, priced at $39,990 and $36,990.
• Investors disappointed as prices cut only $5,000 compared to previous models.
• Sales fall due to the expiration of the $7,500 EV tax credit, affecting market confidence.
• Growing competition from other EV brands poses further challenges for Tesla.
• Analysts express skepticism about the effectiveness of the new models in boosting demand.

Tesla has introduced lower-cost versions of its best-selling Model Y SUV and Model 3 sedan in an attempt to boost sales, now priced at $39,990 and $36,990 respectively. These new models are aimed at expanding the customer base beyond wealthier buyers, according to BBC, Al Jazeera, and Los Angeles Times.

However, investors were underwhelmed as prices were cut by only $5,000, which some analysts argue fails to significantly attract new buyers. Dan Ives from Wedbush Securities expressed disappointment, stating the price drop does not sufficiently address Tesla’s competition, particularly from brands offering more affordable electric vehicles like the Hyundai Kona Electric and Chevrolet Equinox EV, which have lower starting prices under $35,000 according to South China Morning Post and Los Angeles Times.

Adding to the challenge, Tesla's recent unveiling comes shortly after the expiration of a $7,500 federal tax credit for electric vehicles, a significant factor that analysts believe will stifle growth for the company and others in the industry moving forward. Tesla's stock reflected this uncertainty, dropping almost 4% in response to the new product announcements, highlighting a cessation of confidence among investors, according to Al Jazeera and BBC.

Despite hopes that the lower-priced models would reverse falling sales figures, industry analysts remain skeptical. Reports indicate that the market reaction suggests that consumers still view Tesla as a premium option rather than a mainstream one due to its pricing strategy, especially when other manufacturers are offering compelling alternatives at lower prices. This sentiment emphasizes the need for Tesla to enhance its competitive position beyond merely lowering prices, as highlighted by South China Morning Post and Los Angeles Times.

Furthermore, industry experts have underscored the necessity for Tesla to develop and launch more affordable options, ideally below $30,000, to recapture lost market share from emerging Chinese competitors, elevating concerns that the brand has strayed too far from its mission of accessible electric vehicles for all. This move to offer stripped-down versions with limited features may not drastically shift demand or rejuvenate sales as anticipated, according to BBC and Los Angeles Times.