Tesla Stock Is Rising. Robo-taxi Trumps a Lack of New Models.

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 rose Friday, bouncing from its large post-earnings drop. The overall picture for shares, however, looks relatively unchanged. The company has challenges in its electric-vehicle business, but all investors want to think about is robo-taxis.

Thursday’s dip came after CEO Elon Musk warned on Tesla’s earnings conference call that “rough quarters” could lie ahead. Investors 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.

“It’s a Model Y,” Musk appeared to say, talking over Chief Financial Officer Vaibhav Taneja on the Wednesday evening call. Tesla didn’t respond to a request for clarification of his statement.

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.

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Shares of the EV maker added 3.5% on Friday, closing at $316.06, while the S&P 500 and Dow Jones Industrial Average gained 0.4% and 0.5%, respectively.

One thing that helped was robo-taxis. Business Insider reported that Tesla was planning to launch its robo-taxi service in San Francisco this weekend. Adding another city soon after its June 22 launch in Austin, Texas, would be impressive.

Tesla didn’t respond to a request for comment about the launch. Tesla holds a license to test self-driving cars with a safety driver in California.

The rise follows Thursday’s 8.2% drop, 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 EV 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 Tesla stock at Sell with a $120 price target.

“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.

Gary Black, co-founder of Future Fund, the parent of One Global exchange-traded fund, echoed Muster’s view. He is a longtime Tesla investor who recently sold his shares at around $358, according to Black, believing there was some froth in the stock related to Tesla’s robo-taxi opportunity.

Tesla did launch its robo-taxi service in Austin 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.

Friday’s move leaves Tesla stock $16.50 below the pre-earnings price. Shares have recaptured about 40% of the after-earnings drop. Tesla finished down 4% for the week, a relatively small move given the importance of earnings. It’s a sign that, for investors, not much has changed. They know about the challenges to EV sales and are looking toward an AI-trained self-driving future.

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