Elon Musk owned Tesla, Inc. has announced to make more affordable electric vehicles.
The EV making company is planning to introduce low-cost affordable vehicles to address failing sales and declining profits.
The company has publicly stated that they are working on a more budget-friendly model, with some sources suggesting the Model Q or a de-contended Model 3 or Y.
Tesla states that it will build cheaper cars and win approval for its self-driving software in Europe this year after seeing sales decline at the sharpest rate in this decade.
While talking to investors, the electric car firm said it had started "first builds of a more affordable model in June" while posting a slump in car deliveries and shrinking profits.
Tesla's chief financial officer Vaibhav Taneja said the end of a tax credit for buyers of electric cars in the US was also likely to hurt.
He did not provide an update on its outlook for the year, warning it was "difficult to measure the impacts of shifting global trade and fiscal policies".
Car sales fell by 12% to $22.4bn - the biggest drop in at least a decade - after deliveries plunged 14%. Profit shrank by 16% to $1.1bn.
The firm is struggling as it faces cuts to the US government support for electric cars, competition from Chinese carmakers and a dent to Tesla's brand from Musk's controversial political activities.
Meanwhile, Tesla told investors that US tariff policy had cost the firm $300m (£221m) over the three months to June and warned of further pain ahead.
Peter Bardenfelth-Hansen, former head of development Tesla Europe, Middle East and Africa, stated that selling tax credits to other carmakers has probably been what has enabled Tesla to grow into the masterdom that it is today.
"That was a big, big earner for Tesla because there is absolutely no capital expenditure involved, it was directly onto the bottom line of Tesla's earnings on a quarterly basis," he added.
"With that slowing, dissipating, that's going to be a major blow to their income," Hansen continued.
The firm's once-fat margins have shrunk sharply, with profits down in five of the last six quarters.
Musk told investors that he expected the company's sales in Europe to increase once their customers are allowed to use the firm's self-driving software.
He further clarifies that he was expecting the first approval to come in the Netherlands but that the firm also hoped to win sign-off from the European Union, despite it having a ‘Kafkaesque’ bureaucracy.
According to BBC, Tesla's share price has fallen roughly 30% from a peak last year, after Musk's support for Donald Trump helped him win the White House.
Since then, relations have curdled between the former so-called "first buddy" and the US president.
With Tesla now facing much harder competition, Musk said it was unlikely that the launch of a new model would fix the firm's problems by itself.