Tesla Stock Slides 4.5% After Unveiling Cheaper Model 3 and Y; Here’s Why

Tesla’s latest move to make its cars more affordable didn’t quite get the market cheering it was hoping for. On the day Tesla unveiled the new Model 3 Standard at $36,990 and Model Y Standard at $39,990, TSLA stock slid 4.5% as per Google Finance. On paper, it looked like a win for everyday buyers, but the market’s reaction hinted at a more complex story. Investors aren’t just looking at the sticker price, they’re thinking about incentives, features, and long-term demand.

Let’s break down this blog and see why Tesla stock dipped, what’s happening with deliveries, and what investors should watch in the coming months.

Why Tesla Stock Fell?

At first glance, lowering prices should mean more buyers. But Tesla’s new “affordable” models come with a catch. The $7,500 federal EV tax credit, which powered a surge in purchases last quarter, is no longer available for these trims. In fact, without the tax credit, the new Model Y costs about $2,500 more than last month’s base model. For many buyers, this makes the “cheaper” option less attractive than it seems.

There’s also the feature trade-off. The Standard trims drop some key items to hit the lower price point; no second-row touchscreen, no Autopilot, a smaller battery range, and no glass roof. While these cars hit under $40,000, the compromises may make buyers pause, especially with competition heating up from Chinese EV makers like BYD.

Internationally, Tesla faces another hurdle. Deliveries in Europe and the UK are down sharply, up to 22.5% in some regions, while local competitors gain traction. Even as the US market drove record Q3 numbers, global performance signals potential challenges in maintaining growth.

Deliveries in 2025: The Tax Credit Effect

Tesla delivered 497,099 vehicles in Q3 2025, marking a 7.4% increase YoY. Sounds impressive, right? But the story behind the numbers tells a different tale. The first half of 2025 wasn’t as smooth, Q1 and Q2 deliveries were down 13.1% and 13.5% YoY, showing that demand had cooled without any tax incentives.

The Q3 jump wasn’t purely organic, it came from a rush of buyers trying to grab the $7,500 federal tax credit before it expired at the end of September. Essentially, it was a one-time surge, a spike you wouldn’t expect to repeat.

Looking ahead to Q4, analysts predict deliveries will settle closer to 465,000 vehicles. Without the tax credit driving urgency, hitting record-breaking numbers will be tougher, which helps explain why investors reacted cautiously to Tesla’s newly “affordable” Model 3 and Y.

Tesla’s Upcoming Earnings and Investor Watchlist

All eyes will be on Tesla when it releases its next earnings report on October 22, 2025. Analysts are expecting an EPS of $0.45 and revenue around $25.23 billion, but the numbers are only part of the story.

Investors will be closely watching a few key things:

• Q4 deliveries: Can Tesla maintain strong numbers without the tax credit giving a temporary boost?
• Sales of the new Model 3 and Y Standard trims: Will buyers embrace the lower-priced options despite fewer features?
• Tesla Energy and Full-Self Driving (FSD) updates: Progress here could provide steady growth beyond vehicle sales.
• International expansion: How Tesla performs in Europe and Asia will indicate whether it can grow outside the US

Together, these signals will show whether Tesla’s growth is sustainable or if last quarter’s record deliveries were a one-time spike.

What Investors Should Watch Out For?

For the near term, market watchers should focus on:

• Price elasticity of the new trims: Will buyers embrace the lower-priced models despite fewer features?
• Energy business momentum: This division is less dependent on incentives and can provide stable revenue.
• Competition in Europe and China: Tesla’s ability to defend or grow market share overseas is crucial.
• Tech upgrades and AI initiatives: FSD updates and future vehicle launches remain long-term growth drivers.

In short, Tesla’s stock slide doesn’t spell disaster, it signals a shift from incentive-driven growth to organic demand evaluation.

Tesla’s journey from Q3 records to the post-unveiling dip is a reminder that pricing and incentives matter as much as production numbers. The affordable Model 3 and Y trims show Tesla’s push for mass-market adoption, but real success depends on balancing features, costs, and global demand. 

For investors, keeping a close eye on delivery trends, earnings updates, and competitive pressures will be key in navigating Tesla’s next chapter.

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