Tesla has said it will build cheaper cars and win approval for its self-driving software in Europe this year after seeing sales fall at the sharpest rate for a decade.
Elon Musk's electric car firm told investors it had started "first builds of a more affordable model in June" while posting a slump in car deliveries and shrinking profits.
The firm is struggling as it faces cuts to 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.
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.
