The company's decision was taken after the profitability, sales and margins in the first quarter were very disappointing.
The company's CEO, Elon Musk, believes that lower-priced models can reverse the contraction in demand that has slowed globally and forced other carmakers to rethink their plans to go electric.
“The important thing is that investors have a glimmer of hope that growth will pick up again next year,” said Re-Munster, managing partner at Deepwater Asset Management. "Tesla gave those who believed that this would happen what they needed to continue on this path," he said.
Tesla shares increased by 13 percent in the late periods following the announcement.