Tesla shares declined Friday just hours after unveiling its new Model Y crossover utility vehicle, which Wall Street analysts are calling “underwhelming.”
“We thought the unveiling was a disappointment and are seeing a classic ‘sell the news’ situation this morning,” CFRA analyst Garrett Nelson told CNBC.
Tesla stock tumbled nearly four percent in early morning trading Friday, adding to the decline in shares that were already witnessed. CNBC reports that Tesla shares lost $7.4 billion in market value in 2019 thus far.
Tesla enters one of the hottest segments in the market with its debut of the Model Y, presented at its design studio in Los Angeles. As more competition in the electric vehicle segment spurs, the company is being pressured to increase profits while also lowering prices.
“It’s wild to think about, 11 years ago today we’d made literally one car. And a year from now we’ll have made a million,” Tesla CEO Elon Musk said.
The Model Y will hold a price tag of $39,000 to $60,000 while being 10 percent larger than Tesla’s Model 3 midsize sedan. According to Musk, it will feature seven seats, a panoramic glass roof and 66 cubic feet of cargo space.
During Tesla’s shareholder meeting back in June, Musk claimed that the first deliveries of the Model Y would begin in the first half of 2020. However, now he says it will be slated for fall 2020 for the higher-priced versions and will come in spring 2021 for the $39,000 version.
“The problem was the timing of first deliveries,” Nelson said. Competition is seriously heating up against Tesla, with several companies planning to introduce their own all-electric lineups in the upcoming years.
“Tesla is going to face significantly increased EV competition starting with the 2021 model year vehicle, which will be available starting in the spring of 2020,” he said.
On the other hand, Wedbush analyst Dan Ives had the opportunity to test drive the car, in which he said he was “very impressed with the interior and feel of the Model Y on the road as it did not drive like a crossover SUV.” This could be an advantage for Tesla in the competition, he added.