Tesla Inc. is accelerating the launch of more affordable models in a bid to arrest a deterioration in its profit margins and sales.

The electric-vehicle maker plans to release the cheaper cars by the end of this year or in early next, well ahead of the late-2025 timing it had previously pledged. The Elon Musk-led company has been coping with a sales slump as EV demand falters.

“We’ve updated our future vehicle line-up to accelerate the launch of new models ahead of the previously mentioned start of production in the second half of 2025. So we expect it to be more like early 2025, if not late this year,” Musk said on a call with analysts.

The decision to accelerate cheaper models was welcomed by investors and overshadowed what was otherwise an ugly quarter for the EV market leader. It missed Wall Street’s estimates for earnings, sales and margins, while warning of slow growth throughout the year.

Tesla’s shares rose 11 per cent as of 6:06 p.m. after regular trading in New York. The stock tumbled 42 per cent this year through Tuesday’s close, the worst performance in the S&P 500 Index.

The CEO also took a dig at rivals like General Motors Co. and Ford Motor Co., which have paced EV production and moved to reboot their offerings of gas-electric hybrids.

“The EV adoption rate globally is under pressure and a lot of other auto manufactures are pulling back on EVs and pursuing plug-in hybrids instead. We believe this is not the right strategy,” he said.

Tesla’s own strategy has been muddled for much of 2024. It’s spent the last year slashing prices across its lineup in an effort to boost sales volume, only to find demand for its vehicles slowed. 

Adding to the company’s woes has been Musk’s abrupt decision to go “balls to the wall” on a dedicated robotaxi for which the company lacks regulatory approval and possibly the technological capability. Investors had expected the company to instead focus on a new, US$25,000 model that Musk had promised to go into production before the end of next year.

It wasn’t immediately clear if Tesla’s “more affordable models” pledge was a reference to the long-discussed low-cost car, sometimes dubbed the Model 2. Many investors see that as way to help generate new enthusiasm around its lineup and draw new customers.

“I think we have said all that we will on that front,” Musk said when asked about the affordable models.

Tesla gave no timeline, but said it’s continuing to pursue a new module-based “unboxed” manufacturing process for its promised robotaxi model. In a reflection of leaner times, Tesla noted those new models will be built on existing manufacturing lines at current factories to maximize capacity and grow “prudently.”

Read More: Tesla Is Consumed by Chaos in Shift to Musk’s Robotaxi Dream

The carmaker remains the dominant EV maker in the U.S. market, but its earnings have been under pressure for several quarters. Tesla’s automotive gross margin — a key measure of profitability — was 16.4 per cent in the first quarter, smaller than the 17.6 per cent Wall Street expected. That’s far from the 30 per cent peak margin it reported at the start of 2022.

Tesla’s adjusted earnings per share came to 45 cents in the first three months of the year, compared with Wall Street’s expectation of 52 cents a share. Revenue fell 9 per cent to $21.3 billion, according to a statement Tuesday, in line with its first year-over-year drop in deliveries since 2020. That was still short of the $22.3 billion analysts expected.

Meanwhile, Tesla’s global vehicle inventory rose to 28 days, a huge increase from the 15 days at the end of the last quarter. The metric captures how long it takes for a car company to move vehicles off its lots. Tesla sells its cars direct to consumers, and doesn’t have a dealer network.

Tesla isn’t alone in feeling the pinch from a lot of supply chasing waning demand. Average industrywide new vehicle inventories in the U.S. rose to 72 days’ supply at the start of April, according to Cox Automotive. Telsa’s Chief Financial Officer Vaibhav Taneja told investors on the call that the growth in inventories is a temporary setback.

“We expect the inventory build to reverse in the second quarter and free cash flow to return to positive” territory, Taneja said.

The Austin-based EV maker kept its near-term growth expectations in check, saying deliveries may be lower than last year. “In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next generation vehicle and other products,” it said.

Earlier this month, Tesla initiated its largest-ever round of layoffs, cutting more than 10 per cent of positions — though Bloomberg has reported the company may ultimately let go some 20 per cent of its staff. At the same time, two senior executives quit, raising questions about who is in charge of key initiatives.