Tesla Stock Falls as Reviews of ‘New’ EVs Trickle In

Coming into Friday trading, Tesla stock was up about 8% so far this year and up about 82% over the past 12 months. (Getty Images)

Key Points

• Tesla introduced lower-priced “Standard” versions of the Model 3 and Model Y, starting at approximately $37,000 and $40,000.
• Edmunds noted the new Model Y lacks sporty reflexes but offers a comfortable ride, while the Model 3 maintains strong performance.
• Tesla stock ultimately finished Friday’s session lower.

Tesla has new models to entice buyers. Now car reviewers are driving them. The vehicles perform well, but ride quality isn’t the biggest question facing investors.

On Tuesday, Tesla unveiled “Standard” lower-priced versions of the Model 3 and Model Y, starting at about $37,000 and $40,000, respectively.

The new vehicles have fewer features and a shorter per-charge range than most of the “Premium” versions. Automotive data provider Edmunds was given early access to the pair and took them for a spin.

“The new variant of the Model Y is the big surprise,” wrote Alistair Weaver, Edmunds editor in chief. It lacks “sporty reflexes” but is still a comfortable ride. “For only a $5,000 price difference, questions remain about whether the new Standard trim is a good value or just slightly cheaper.”

That’s the main issue for investors. Will a gap of a few thousand dollars be enough to increase the pool of Tesla buyers? Or will shoppers, already likely to buy a Tesla, trade down to save some money?

It’s too early to tell, but the new Model 3 and Y look like solid offerings that feel like traditional Teslas, said Edmunds.

“The new Standard Model 3 offers fewer compromises in driving quality than the new Model Y, maintaining strong performance and sporty handling,” added Weaver. “In contrast to the Model Y, the Standard version of the Model 3 retains more value with its price drop from the Premium trim.”

The “Standard” version still has the panoramic glass roof, part of the reason that Weaver thinks it’s the best option for most buyers—unless they want the all-wheel drive Performance trim, which starts at about $55,000.

One thing that doesn’t come standard on the “Standard” models is Tesla’s Autopilot driver assistance, which is a potentially “cynical” decision, Weaver said.

Autopilot is Tesla’s lower-level driver assistance product. Its top-tier product is called Full Self-Driving. It costs $99 a month. The “Standard” versions have the hardware and software to run Autopilot, but Tesla appears to want to push people into the higher-priced driver assistance product.

Tesla reports third-quarter results on Oct. 22. Investors will want to hear about the new vehicles and order activity then.

Overall, investors, who expected the new models, appear fine with the vehicles. Coming into Friday trading, the stock was up about 1.3%. The reaction to the new cars, overall, has been small.

On Friday, shares traded as high as $443.13, before sliding to $413.49, down 5.1%. Trade tensions between the U.S. and China hit many stocks. The S&P 500 and Dow Jones Industrial Average fell 2.7% and 1.9%, respectively.

Tesla is more volatile than most stocks. It also does a lot of business in China, which is one reason it can have a strong reaction to China-related news.

Through Friday trading, the stock has gained about 2% so far this year and 73% over the past 12 months. The gains have come despite falling car sales. Investors are more focused on Tesla’s AI opportunities, such as the robo-taxi business it launched this summer in Austin, Texas.

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