Shares of TSLA entered the conference call trading flat in after-hours. Throughout the call, shares showed a slow, steady decline and ended the call down 4.3%. The fact that there did not seem to be one comment on the call that triggered the decline tells me that investors were searching for something and not hearing it. I believe that something was largely comments about what to expect in September in Austin.

Austin has become the pressure point for the Tesla investment case. It is of course all about autonomy, and the robotaxi is the second leg to that story, with the first being FSD subscriptions.

Investors were hungry for clear expectations about how many vehicles are on the road in Austin today and what it will end the quarter at. They wanted to hear that the company expects the human supervisor to be removed during the quarter, or that the service will shift from being invite-only to public availability.

Instead, they got comments about how half of the US will be able to access a robotaxi by year-end, pending regulator approval. That “pending regulator approval” caveat means it likely won’t happen by year end. Investors also got a drumbeat of the company being “paranoid” about safety.

When you put it together, the message about the robotaxi rollout in Austin for the September quarter was: don’t expect much, and things get more exciting in the December quarter with the rollout in the San Francisco Bay Area.

I’m a believer that Tesla is best positioned to win in autonomy. I am a believer that the rewards of autonomy will far exceed those of the EV business. That said, I wanted to hear more details about how the master plan will advance in the near term.

Over the next several trading days, investors will recalibrate their expectations for what to expect in Austin this quarter. That will likely mean shares of TSLA drift lower. That trend will likely quickly reverse on any news of the service getting opened to the public or the safety observer being removed. The bottom line: the end game is still in Tesla’s hands, and trying to predict the exact timing of when each step will move it forward is a fools game.

The details on the new affordable model are coming into focus. For starters, the company reiterated their previous guidance to expect the car to be in production by end of the year. I was in the camp that it would be pushed back to mid 2026, so the update came as a positive surprise. Second, Musk said it basically will look like the Model Y. My sense is it will have same body look (but 15% smaller), less range, smaller motor, and slimmed down interior trims.

The company confirmed that the first builds of the new affordable model began in June 2025, indicating that prototype assembly is underway on a pilot line. The current roadmap points to a formal product unveiling and volume production ramp in late 2025. I expect we see 10k deliveries (out of around 473k Street est) in the December quarter.

It sounds like the goal is for the car to be priced around $30–$35k, about $10k below the lowest price Model 3. This pricing strategy is intended to broaden Tesla’s addressable market while still preserving some margin.

A critical concern is cannibalization of the Model Y, currently Tesla’s best-seller, if the cars look the same. Tesla’s strategy to mitigate this is twofold. First, the new model would likely be 15% shorter than a Model Y. The battery pack will likely be smaller, yielding adequate range (250 miles) but less than a high-end Model Y. Performance will be modest with a single-motor powertrain on base trims. In short, Tesla is effectively creating a Model Y variant, leveraging the existing Model 3/Y platform to keep costs down, thereby accelerating time to market. This approach was confirmed by Tesla’s engineering team, who noted that the next affordable offerings will “resemble in form and shape the cars we already make.” By sharing components and limiting new features, Tesla contains costs and keeps the new model’s capabilities below those of a Model Y.

Additionally, Tesla can regulate how many of the new low-cost cars it produces in the first year, possibly prioritizing certain markets (like emerging markets or regions where Model Y is too pricey) to limit direct sales overlap. The company’s view, echoed by Musk, is that any cannibalization is acceptable if it results in greater volume and fleet size.

Tesla has historically been less concerned about one model eating another’s sales, provided the overall brand expands. Still, I expect margin pressure once this vehicle launches; a cheaper Tesla will carry lower per unit profit, and if it pulls significant volume from Model Y, it could dilute margins.

I agree it’s the right move to go down market. The goal is this unlocks a new chapter of growth. It’s worth noting that Tesla is deferring the Cybercab robotaxi project, instead building the affordable car on existing lines with incremental improvements, which is a sign that Tesla wants to ensure a smooth ramp.

I expect deliveries to be flat year over year in September, vs. expectations coming into the print calling for deliveries to be down 6%.

Vaibhav Taneja, CFO, said it best: “If you’re in the US and looking to buy a car, as you all know, we may not be able to guarantee delivery for orders placed in the later part of August and beyond.”

The phase out of the $7,500 federal EV credit on September 30 is expected to drive a surge in vehicle orders and deliveries. Tesla has already rolled out its planned incentives and is already “gearing them back” to manage demand against limited inventory.

Vaibhav noted that due to lead times on parts, Tesla has limited supply in the U.S. this quarter, which could constrain its ability to fulfill late orders. The bottom line: they won’t be able to keep up with demand and the number should still be impressive.

Based on my math, this spike in demand will impact about 21% of Tesla’s global deliveries. This is based on my assumption that 35% of cars are sold in the US, and 60% of those buyers are eligible for the credit. If you assume that 20% cohort drives deliveries to be up 20% year over year, and the rest of the world is down 6%, that yields overall deliveries flat in the quarter. Flat is a win given deliveries were down 14% in June. Unfortunately, investors will not give them any credit for the surge given it fades in December.

Importantly, Musk made sure to keep the delivery bar low for the out quarters: “We are in the transition period where we will lose a lot of incentives in the U.S.… we could have a few rough quarters including December, March 2026, and maybe June.”

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