Tesla
stock tried to make it five winning days in a row. News about its next car was boosting shares early in a new week, but the impact faded. Still, investors are feeling better after a recent bout of volatility.

At first, it looked like the reports would help Telsa stock, (ticker: TSLA) which rose 1.5% in premarket trading Monday, while
S&P 500
and
Nasdaq Composite
futures were both up a little.

Shares traded as high as $226.32 during the regular session, but closed at $219.27, down 0.3%, while the Nasdaq rose 0.3%. The drop Monday still leaves shares up roughly 11% over the past five days.

What had investors excited initially on Monday was a Reuters report from Germany about a new Tesla electric vehicle that will be priced around 25,000 euros, or $27,000.

Investors, and car buyers interested in EVs, have long awaited a smaller, lower-priced Tesla. Investors have taken to calling in the Model 2 although there is no official name yet. The Model 3, released in 2017, was Tesla’s first mass-market vehicle. Tesla started out shipping the higher-priced Model S sedan and Model X SUV.

Tesla didn’t respond to a request for comment about the plans, but the reports mention casting the vehicle’s frame instead of welding metal parts together. That innovation, which Tesla is already using at its plants in Germany and Texas, can help lower manufacturing costs.

Around 2019, shortly before the Model Y started shipping to customers, Tesla unveiled its huge Cybertruck. It decided to go big before going smaller, trying to get a piece of the lucrative North American pickup truck market.

The Cybertruck has proved difficult to build and is due to start shipping to customers this month. CEO Elon Musk says it won’t be a significant profit contributor for years to come.

While Tesla devoted resources to developing the Cybertruck, the company ceded EV market share in China as the market for smaller, lower-priced EVs exploded. Tesla simply doesn’t have an offering in that market segment. China’s
BYD
(1211.Hong Kong) has become the leading EV maker in China, essentially, by offering a broader EV lineup.

Details about the design or timing of the $27,000 EV are thin, but investors know it’s coming. Musk has talked about it several times in recent months.

Still, the reports were enough to push up the stock. Tesla shares had a miserable October, starting the month above $250 apiece and then dropping 20% to close the month at $200.84. Shares even closed below $200 on Oct. 30 for the first time in months. Disappointing third-quarter delivery figures and earnings contributed to the drop.

Despite giving up early gains, a new car could dissipate all that angst and disappointment—investors just need to see it.

Write to Al Root at allen.root@dowjones.com

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