Elon Musk promises cheap $25k Tesla  within a YEAR - boosting share price by 11% even after EV maker's worst earnings since 2012

Elon Musk has promised a new low-cost Tesla will be on the market within a year as he faced investors after sales fell to their lowest since 2012.

During an earnings call, Musk said EV adoption rate in general was 'under pressure' which had hampered sales as he pointed to the fact many other automakers were now focusing on hybrid vehicles instead.

However, its commitment to developing affordable cars boosted Tesla's share price almost 10 percent after markets closed. 

Musk confirmed a smaller Tesla model - which is expected to cost around $25,000 - will be on the roads by either late 2024 or early 2025. It marked an acceleration from its previous target of the second quarter of next year.

The 52-year-old entrepreneur remained bullish during Tuesday's earnings call as he insisted electric cars were the future despite sluggish adoption rates. He added that driving a gas vehicle would soon be the equivalent of 'riding a horse or using a flip phone.'

Tesla reported first-quarter earnings that were even lower than expected. Pictured is the new Cybertruck in January

In after-hours trading Tesla's share price was up almost 10 percent after the company made assurances of affordable cars in the near future

Its first quarter revenue was $21.3 billion, below Wall Street estimates of $22.3 billion, and 9 percent less than the $23.3 billion it made in the same quarter last year, the company reported on Tuesday afternoon.

It was the steepest year-over-year drop since 2012.

Nonetheless, an hour after reporting results, Tesla's share price was up more than 9 percent to around $158. Its closing price was around $145.

Other good news was that the company produced 1,000 Cybertrucks in one week in April, a sign it will be able to ramp up production to meet demand.

It also said it would bring forward the production of more affordable cars, critical if the company is to scoop up a lucrative share of the mass market.

'In terms of a new product roadmap, there’s been a lot of talk,' Musk said during the call.

'We’ve updated our future vehicle lineup to accelerate the launch of new models.'

He also reaffirmed that the future of Tesla would involve self-driving taxis or robotaxis, with an unveiling expected for August 8. He likened the service to AirBnb or Uber. 

The EV maker's share price had fallen some 40 percent this year, making it one of the worst-performing companies in the S&P 500.

Exacerbating concerns among investors was that the company reportedly canceled its project to build the 'Model 2.' The car was rumored to cost around $25,000 and for many analysts was a vital product for Tesla to crack the mass market.

Earlier this month the company also reported delivery numbers for the quarter, which fell very short of expectations and hinted that revenue would not be high.

It delivered 386,810 vehicles in the first three months of the year, down 20 percent from the previous quarter and almost 9 percent from the same period in 2023.

Wedbush analyst Dan Ives described it as 'a train wreck into a brick wall quarter for Musk.'

A source of additional headaches for Tesla this quarter has come from Chinese competition. While it was developing the Cybertruck, companies like BYD, Li Auto and Nio have been focusing on affordable EVs for the mass market.

They are now producing cars for as little as $10,000 - around a third of the price of the cheapest electric car available in the US.

An hour after reporting results, Tesla's share price was up more than 9 percent to around $158

Chinese EV maker BYD recently released the Seagull, which costs $9,700 in China. Tesla recently scrapped its plans to make a cheap 'Model 2' car for the mass market

In a bid to compete, Tesla this weekend started slashing the price of its cars around the world.

Tesla cut the starting price of the Model 3 in China by 14,000 yuan, or $1,900, to 231,900 yuan, or $32,000, its official website showed on Sunday.

In Germany, the price of the Model 3 rear-wheel-drive was slashed by 2,000 euros to 40,990 euros, or around $43,600. There were also price cuts in many other countries in Europe, the Middle East and Africa, a Tesla spokesperson told Reuters. 

The Cybertruck has also been a source of concern among investors. The unconventional vehicle bears little in common with typical cars and features many costly gimmicks, such as its stainless steel body panels.

Then last week the automaker recalled nearly 4,000 Cybertrucks to fix an accelerator pedal fault that could cause the EV to accelerate at top speed.