What if no one wants a cheap Tesla?

• Tesla reported disappointing results for the first quarter.

• But investors celebrated news of cheaper vehicles on the horizon.

• That assumes lots of people want to buy a Tesla but can't afford one.

Tesla had some bad news and some good news when it released first-quarter earnings.

The bad: It reported revenue and earnings that were below Wall Street expectations, and posted negative free cash flow.

The good news: Cheaper Teslas are on the way!

Tesla's plan to accelerate the launch of new models — including more affordable cars — and talk of a robotaxi service was enough to send the stock price higher despite the earnings miss.

The investor reaction suggests Wall Street has bought into the idea that cheaper vehicles will help solve some of Tesla's demand challenges.

EV sales growth has slowed in part because most of the options are more expensive than the average car purchase in the US, or so the theory goes.

"If you have a great product at a great price, the sales will be excellent," CEO Elon Musk said Tuesday on an earnings call.

That might ordinarily be true. But Tesla is no ordinary product. Even at a lower price, say $25,000, it's a very significant purchase — likely one of the most expensive purchases a person will make.

So let's for a second look at why a lower ticket price might not be a panacea for Tesla.

Switching from gas to electric is a big deal

Many EV buyers thus far have been early adopters, and there are many, many more car buyers who are yet to be convinced. It's part of the reason hybrids have been having a moment, as an intermediate step from gas-powered cars to fully electric vehicles.

It's possible that there are a bunch more buyers out there who would love to buy a Tesla but just can't afford one. How big is that group of buyers? It's not clear.

"These new vehicles still bring a lot of new, unanswered questions, and TSLA didn't really address, leaving us to believe much is still in flux," UBS said in a note following the earnings release.

"What are they really, and what buyer are they targeting other than 'lower cost'? Lower cost may not be enough because of lower used Tesla pricing," the note added.

For context, a quick search of Carvana reveals a whole bunch of used Teslas priced in the $25,000 to $30,000 range. Many of those listed have seen recent price drops.