The budget Teslas (TSLA) are here. 

Following years of hints and pricing teases, EV giant Tesla just showed off its lower-cost trims, designed to drive volume without disrupting the lineup. 

The market reaction, though, was immediate and surprisingly mixed, reflecting the tension between list prices and perceived step-up in value.

A quick read on Tesla’s lower-cost options:

  • Models/prices: Model 3 at $36,990; Model Y at $39,990.
  • Hardware/software: Familiar packages marked by incremental updates through Tesla’s over-the-air updates.
  • Target buyer: First-time EV shoppers backed by fleet and mass-market channels.
  • First read: Stock is down 4% on launch day.

Despite the drop, though, Tesla stock is in the green year-to-date, while its three-month performance is even more impressive at 47%.

Over the past few months, its tape has turned explosive, following a steady spring rally as shares ripped through Q3, capped by September’s 35% moonshot. Stacking the last six months, the incredible run clocks in at roughly 90% on compounded math.

That’s where longtime Tesla bull and veteran tech analyst Dan Ives of Wedbush drops in with a healthy new target, and a caveat. He didn’t mince words on the budget EV development, but did drop an explosive new price target. However, the upside pivots on a different engine of value entirely.

The “affordable” Teslas are here, but Wall Street’s watching something bigger.

Chip Somodevilla/Getty Images

Dan Ives hikes Tesla target but slams “uninspired” budget EVs

Wedbush tech analyst Daniel Ives didn’t hold back on Tesla’s new low-cost models, calling them “relatively disappointing,” stating that the features and pricing fall short of sparking fresh demand. 

Tesla’s latest move was intended to offset the loss of U.S. EV tax credits and revitalize deliveries toward a 500,000-unit quarterly run rate. Instead, the market yawned, and investors are viewing the trims as a $5,000 markdown instead of a true product refresh. 

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Ives called it more of a “pricing tactic, not a catalyst,” arguing the models genuinely lack differentiation and come at a time when BYD, Nio, and XPeng are gobbling up Tesla’s lunch in global EV sales.

Surprisingly, however, he maintained his buy rating and reaffirmed his Street-high $600 price target, implying a massive 37% upside from current levels, based on Tesla’s AI and autonomy pipeline. 

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He points to the successful June launch of Tesla’s Robotaxi service in Austin, early traction for Full Self-Driving version 14, and AI-trained humanoid robots driving the company’s real valuation drivers. 

In his view, Tesla’s next leg of expansion has less to do with it cutting stickier prices and more to do with proving its software is worth a premium that the rest of the market can’t match.

Quick takeaways:

  • Ives unimpressed: Wedbush’s Daniel Ives called Tesla’s new Model 3 and Model Y “relatively disappointing,” saying that pricing tweaks won’t drive new demand.
  • Market reaction: Shares fell 4% on launch day, with investors viewing the rollout as a simple markdown on the back of cutthroat competition from BYD, Nio, and XPeng.
  • AI remains the bet: Ives still backs Tesla’s AI future and keeps a buy rating with a $600 target (37% upside).

Chinese rivals are outrunning Tesla on 2025 deliveries

China’s EV heavyweights are setting a blistering tone as they continue widening their lead over Tesla. 

For perspective, EV front-runner BYD sold 396,270 new-energy vehicles (NEVs) in September, up 6% sequentially, while capping Q3 at 1.11 million units as it shifted further toward pure EVs. Through September, the company’s year-to-date tally stands at an eye-catching 3.26 million, well ahead of every global rival.

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XPeng is also surging from a smaller base, posting a record 41,581 September deliveries (+95% year over year, +10% sequentially) and 116,007 units in Q3 (a 149% jump from last year). As it stands, the EV upstart’s nine-month total of 313,196 already dwarfs 2024’s full-year output. 

On top of that, Nio isn’t far behind, delivering 34,749 vehicles in September (up 64% year over year) and 87,071 in Q3 (up 41% year over year), both records that underscore the company’s turnaround in volumes and momentum.

Tesla hit a record 497,099 global deliveries in Q3, but its lead is shrinking quickly. In 2025 volumes, BYD’s roughly 1.6 million pure EVs outpaced Tesla’s near 1.2 million, a clear reversal of leadership in global all-electric sales.

Looking at the most recent stretch, the pattern is just as clear. 

BYD delivered nearly 770,000 vehicles across August and September combined, while  XPeng strung together three consecutive monthly records (36,000 in July, 37,709 in August, and 41,581 in September).

Similarly, Nio climbed steadily as its deliveries came in at 21,017 in July, 31,305 in August, and 34,749 in September. 

Each company is marching forward with aplomb into the final quarter, posting superb gains that highlight how quickly China’s EV ecosystem is growing compared with Tesla’s steadier pace.

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