Tesla Stock Is Down. A New Trim Isn’t a New Model.

The new lower-priced Tesla model, designed to help boost sales in the second half of 2025, might just be a different version of the Model Y. (Dreamstime)

Tesla stock fell again in early trading Friday, extending its post-earnings drop.

Investors are worried about the “rough quarters” CEO Elon Musk has said could lie ahead. They are also starting to worry that the new lower-priced model they have been waiting for isn’t a new model at all, but a lower-priced Model Y.

A cheaper Model Y, with potentially fewer features, less power and range, and lower-end materials, wouldn’t be a new model. In the car business, that would be called a new trim level of an existing model.

Shares of the electric-vehicle maker were down 0.3% in premarket trading at $304.29, while futures on the S&P 500 and Dow Jones Industrial Average were up 0.1%.

The drop follows Thursday’s 8.2% dip, which came in response to the company’s second-quarter earnings reports. Most numbers were essentially in line with Street expectations, but CEO Elon Musk’s comments might have spooked investors.

“Yeah, we probably could have a few rough quarters,” said Musk, answering a question about free cash flow and the loss of federal electric-vehicle purchase tax credits. “I’m not saying we will, but we could. Q4, Q1, maybe Q2.”

One thing designed to temper the pain is a new, lower-priced vehicle. Tesla started producing it in the second quarter, according to management, but it won’t go on sale until the fourth quarter.

New production is helpful, but the Street and investors are starting to fear that it isn’t an all-new model serving a different segment of the car market. It might just be a lower-end Model Y.

The second half of the year “faces more challenges,” wrote Wells Fargo analyst Colin Langan. “We see limited demand offset from the affordable Model Y coming.” He rates shares Sell and has a $120 price target for the stock.

“The reveal that the new, more affordable model will look just like the Model Y raises concerns about potential cannibalization,” wrote Deepwater managing partner and Tesla investor Gene Munster on X.

Future Fund Active ETF co-founder Gary Black echoed Muster’s view. He is a longtime Tesla investor who recently sold his shares at around $350, believing there was some froth in the stock related to Tesla’s robo-taxi opportunity.

Tesla did launch its robo-taxi service in Austin, Texas in June. And Musk believes the service can cover half the U.S. population by the end of the year, pending regulatory approvals.

Musk believes the end of the rough quarters is tied to Tesla’s self-driving technology. That may be the case, but there are still investors who want it to sell more cars.

Coming into Friday trading, Tesla stock was down 24% year to date and up 39% over the past 12 months.

Write to Al Root at allen.root@dowjones.com