Tesla Stock: Bombshell Speculation Sparks 5% Rally—Is Elon Musk Pulling The Trigger On The Cheapest Tesla?

Tesla shares surged more than 5% on 6 October, following a wave of speculation that the electric vehicle giant is preparing to unveil its most affordable model yet.

The rally, which pushed the stock to around $453 (£357) per share, was fueled by cryptic teaser videos posted on Tesla's official X account, hinting at a major announcement scheduled for October 7.

Teasers Ignite Investor Buzz

The buzz began over the weekend when Tesla released a nine-second video featuring a spinning wheel and the date '10/7,' followed by another clip showing illuminated headlights in a dark setting.

Reports suggest that the company is preparing to launch a stripped-down version of the Model Y, designed to be roughly 20% cheaper to produce than the current refreshed variant.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, commented: 'Tesla is teasing something big as a flurry of X posts has fans bracing for what looks like the launch of a more affordable Model Y tomorrow.'

He added that the price tag would be 'the real tell,' offering clues about how far Tesla has pushed cost savings and how much new demand it could unlock.

Record Deliveries Add Fuel to the Fire

The timing of the teaser coincides with Tesla's announcement of record-breaking third-quarter deliveries. The company reported delivering 497,099 vehicles in Q3 2025, significantly exceeding Wall Street's estimate of around 443,000. Production figures stood at approximately 447,000 cars.

The surge in deliveries was primarily attributed to a last-minute rush ahead of the expiration of the $7,500 US federal EV tax credit on 30 September. Tesla's strategy of offering discounts and financing deals helped 'pull forward' demand into Q3, although analysts warn this could leave a sales gap in Q4.

Market Reaction and Valuation Concerns

Tesla's recent stock rally pushed its market valuation to $1.40 trillion. However, year-to-date, TSLA has gained only 1.5%, trailing the S&P 500's 12.5% rise and underperforming many of its automotive peers.

Despite the momentum, analysts remain divided. Some have reiterated bullish ratings with price targets ranging from $120 to $600, reflecting optimism around Tesla's growth prospects. However, the average analyst price target remains at $351.34 as of the time of writing.

Tesla's trailing price-to-earnings (P/E) ratio stands at 259.52, reflecting a valuation that some market commentators argue is justified by near-flawless execution and sustained growth. This elevated multiple has prompted caution among investors who worry that any misstep, whether in production, demand, or regulatory changes, could trigger a sharp correction.

The Musk Factor

Elon Musk's influence on Tesla's fortunes remains undeniable. The recent stock surge has reportedly pushed his personal net worth to around $482.3 billion, reinforcing his status as one of the wealthiest individuals globally.

Musk has previously hinted at plans to expand Tesla's product line to include more affordable models, though timelines have often shifted.

In June, Tesla confirmed it had completed 'first builds' of a lower-cost Model Y, with plans to begin selling it in Q4 and ramp up production gradually. While Tesla has not disclosed specific production targets for this variant, analysts estimate it could contribute over 150,000 units in 2026, supporting broader delivery projections of up to 1.85 million vehicles next year.

What's Next?

All eyes are now on Tesla's 7 October event, which could mark a pivotal moment in the company's strategy. If the rumours prove true, the launch of a budget-friendly Model Y could help Tesla regain momentum in a market increasingly crowded by competitors like BYD and XPeng.

The move would also align with Musk's long-standing vision of making electric vehicles accessible to the masses. However, with margins narrowing and valuation metrics stretched, Tesla faces the challenge of balancing affordability with profitability.

Whether this is a bold pivot or a calculated marketing play, one thing is clear: Tesla's next move could reshape the EV landscape, and investors are watching closely.