After a highly volatile April, Tesla (TSLA) stock is facing more uphill battles as it enters May.
A year ago, few would have argued that the company held the indisputable title of electric vehicle (EV) industry leader. Now, its future appears increasingly uncertain as bad news continues to pile up and investor confidence wavers.
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Many of Tesla’s problems can be attributed to CEO Elon Musk and his political affiliations, which have sparked a global backlash and severely impacted Tesla’s vehicle sales. Many consumers have turned their backs on the company, and the company’s waning popularity across Europe makes it clear that sentiment towards Musk isn’t any better across the Atlantic Ocean.
In April 2025, Tesla confirmed some analysts’ fears by reporting extremely disappointing Q1 earnings. Now the company has announced a decision that indicates its demand problem is even worse than many expected.
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Tesla’s new plan to sell Model Ys isn’t what it appears
Even before Tesla’s underwhelming Q1 earnings and delivery reports, investors could see clearly that the company’s road to recovery wouldn’t be easy. Tesla had suffered extreme brand damage, sparking entire protests as owners rushed to sell their EVs and vowed never to buy from Musk again.
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That isn’t to say that the EV market in the U.S. has suffered recently. On the contrary, EV sales rose 10% between January and March 2025, according to data from the Kelley Blue Book, while Tesla’s own unit sales declined by 9%, indicating that demand is rising for these alternative energy vehicles but not for those made by Tesla.
Last year, Tesla officially scrapped its plans to introduce a $25,000 EV, which could potentially have boosted sales at a critical time.
Now, in a clear attempt to make up for it, the company has announced that it will be discounting its Model Y, but not enough that it is likely to matter to consumers. The only real incentive for buyers that this initiative includes is a lower interest rate, which ultimately doesn’t equate to very much in savings.
Tesla has announced that it will offer a “1.99% APR or $0 Due at Signing available for well-qualified buyers” on its new Model Y, a first for the company.
To the trained ear, that likely sounds like something offered in an infomercial from a local car dealership advertising a Columbus Day weekend special on brands such as Toyota or Hyundai.
To clarify, the lower rates Tesla is offering only add up to a few thousand dollars in savings, a vehicle priced at $41,490 before the federal tax credit. That still leaves a high price tag at a time when EV buyers have many less expensive options.
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“These discounts and subsidized financing point to soft demand for the updated best-selling vehicle in the US,” Electrek reports. “Tesla just delivered a disastrous first quarter, which it mostly blamed on the Model Y changeover, resulting in lower inventory.”
Tesla’s demand problem doesn’t stop at the Model Y
This development shows that Tesla wants to move the Model Y, but not so badly that it is willing to offer consumers a real discount. Between this and the 2024 decision to scrap the $25,000 Tesla model, it is clear that Musk doesn’t want to create an EV with mass market affordability.
Related: Controversial EV tax credits will be bad news for Tesla
However, this does raise the question of just how many Tesla Model Ys will sell as a result of these lower interest rates. In all likelihood, it won’t be many, as it is increasingly clear that consumers aren’t embracing the Tesla brand anymore, particularly in the U.S.
It’s important to note, though, that Tesla isn’t just having trouble moving the Model Y. As TheStreet recently reported, photos of the company’s gigafactory in Austin, Texas, show hundreds of idle Cybertrucks, indicating that the unconventional truck isn’t selling well either.
With demand for multiple vehicles waning, Musk may have to make some difficult choices if he wants to increase sales, which Tesla desperately needs right now.
“Industry experts had speculated that some of Tesla’s declining vehicle sales might have had to do with people waiting for the new Model Y to make a purchase,” reports Sherwood News. “Discounts suggest that’s not the case.”
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