Production headaches on three continents. Intensified competition. A falling share price. And an absent-minded chief executive seemingly out to alienate some of the company’s most loyal customers.
A growing list of problems at Tesla, the world’s most valuable car company, is puncturing its mystique as the segment’s technology leader, leaving analysts and investors wondering if it can continue to dominate the electric vehicle market.
At the center of investor concerns is Elon Musk, the CEO whose high-profile purchase of Twitter has overshadowed his role at Tesla at a critical time in the automaker’s relatively short history.
Tesla is making an effort to ramp up production at new plants in Austin, Texas and outside of Berlin. Covid restrictions and dysfunctional supply chains, a problem for all automakers, have led to intermittent closures at Tesla’s Shanghai plant.
With interest rates rising and a global recession looming, demand for Tesla vehicles appears to be waning. Just a few months ago, potential buyers had to wait months for a new Tesla. Now the cars are available within days, which analysts see as a sign of weaker demand.
Yet Mr. Musk is preoccupied with Twitter, a company he admits bought at too high a price. Last weekend, he asked users of the service in a “poll” whether he should step down as CEO of Twitter, saying he would stick with the results. A majority of respondents said yes.
On Tuesday, Mr. Musk said he would step down as CEO of Twitter “as soon as I find someone foolish enough to take the job!” But he also said he would continue to lead the team responsible for software and servers.
Managing Tesla “is not a part-time job in these volatile and challenging times,” said Axel Schmidt, a senior managing director at Accenture who oversees the consulting firm’s automotive division.
Tesla did not respond to a request for comment.
Mr. Musk remains widely admired in the auto industry for how he proved that battery-powered vehicles can be stylish, fun to drive and profitable. Tesla’s success forced car giants like General Motors, Ford Motor and Daimler to respond with their own electric models.
Mr. Musk personifies Tesla as much as Henry Ford ever personified the automaker that bears his name. As a co-founder, CEO and largest shareholder, Mr. Musk is able to make decisions quickly and has built a significant lead over traditional automakers in battery technology and software.
But it’s unclear who’s minding the store as Mr. Musk tries to remake Twitter. Tesla does not publish a management pyramid. The company’s website lists only three top executives: Mr. Musk; Zachary Kirkhorn, the finance director; and Andrew Baglino, a senior vice president in charge of engineering.
Mr. Musk “has such a big personality, the impression is that the company is weak without him and nothing happens without his approval,” said Garrett Nelson, a senior equity research analyst at CFRA, an investment research firm. (Mr Nelson added that he disagreed with that view.)
And with traditional automakers selling credible electric vehicles, Tesla no longer has the market to itself.
In the United States, electric vehicles from Ford, General Motors and Hyundai have eroded Tesla’s lead. Competition will become fiercer this year with the introduction of models such as the Cadillac Lyriq and the Nissan Ariya.
In China, Tesla faces a stiff challenge from local manufacturers such as BYD, which stopped making internal combustion engine models this year to focus solely on electric vehicles and has surpassed Tesla in the number of cars sold.
In Europe, Volkswagen and its subsidiaries such as Audi already sell more electric cars than Tesla, although Tesla’s Model Y and Model 3 remain the most popular all-electric vehicle models.
In an industry that thrives on new products, Tesla hasn’t introduced a new passenger car since the Model Y, an SUV, in 2020. The company has pledged to start selling its long-awaited Cybertruck in 2023. But the pickup is coming long after competing products from Ford, Rivian and General Motors.
Tesla’s share price, which fell 66 percent from its peak in November 2021 by the end of the trading day on Wednesday, shows how quickly investors have lost confidence in both the company and Mr. Musk. The stock fell 8 percent on Tuesday alone.
The drop partly reflects fears that Musk will have to sell more parts of his stake in Tesla to pay for his takeover of Twitter. To fund his $44 billion purchase of the social media site in October, Mr. Musk sold Tesla shares worth $23 billion, flooding the market and sending the price down. He remains Tesla’s largest shareholder.
The plummeting shares are also a sign that investors are no longer believing in Mr Musk’s promises that Tesla will sell 20 million cars a year by 2030, the same as Volkswagen and Toyota combined. It was that dream of global dominance that justified Tesla’s $1 trillion valuation. (Today Tesla is worth less than half.) Mr. Musk proposed on Twitter on Tuesday that the shares had fallen because of rising interest rates and the threat of recession.
Mr. Musk has always been a spry boss, but his leadership style has been on vivid display since he bought Twitter, where he laid off or laid off more than half of the staff and required those who stayed to work “hardcore” hours.
Chaos on Twitter has earned Mr. Musk gutted like a genius, and his inflammatory tweets threaten to alienate potential buyers skewing the left. He has suggested that Dr. Anthony Fauci, the nation’s leading immunologist, is facing prosecution, accusing Massachusetts Senator Elizabeth Warren of harming America after she said he neglected his duty to Tesla shareholders.
“There was such an aura around Elon Musk that he could do no wrong,” says Taylor Ogan, a hedge fund manager and YouTube presence who has owned three Teslas. “That finally caught up with him.”
Joya Banerjee, a senior adviser focused on gender-based violence at Washington’s humanitarian organization CARE, looked at a Tesla last year when she was looking for an electric car. But even before Mr. Musk bought Twitter, she was put off by what she saw as his ego, sexism, and excessive power.
“I couldn’t see my money going to his CEO’s salary,” she said. Mrs. Banerjee bought a Ford Mustang Mach-E instead.
Kenneth Holecko, a retired government human relations manager who lives in Virginia and owns a Tesla, said Mr. Musk’s statements about Dr. Fauci and other subjects added to concerns he had about the company’s credibility on things like the safety of its autonomous driving software.
“I’m not going out and selling my Tesla because of what’s going on with Twitter,” said Mr. Holecko, “but I would never buy a Tesla again.”
Survey data indicates that Mr. Musk’s behavior has damaged the Tesla brand among liberals, the group most likely to buy electric cars. According to Morning Consult, a research firm, Tesla’s net preference score – the number of people who view the company positively minus those with a negative view – fell from 31 percentage points at the beginning of the year to 10 percentage points in November.
Tesla’s net favorable rating among Republicans improved slightly, to 27 percentage points in November from 21 percentage points in August, as Mr. Musk adopted some conservative talking points, according to the company’s research. But it’s unlikely there will be enough new Republican Tesla fans to offset disgruntled Democrats, said Jordan Marlatt, an analyst with Morning Consult.
“Tesla is becoming a rather partisan brand, and that could have quite serious consequences for Tesla going forward,” said Mr. Marlatt.
While Tesla still dominates electric vehicle sales in Germany, it has been steadily gaining ground ahead of other manufacturers. Mr. Musk’s recent activities on Twitter made headlines across the country, including Germany Ministry of Foreign Affairs joins European Union to condemn deactivating accounts of some journalists on Twitter as dangerous to press freedom.
The sour mood around Mr. Musk is beginning to affect German motorists, with a clear majority saying his takeover of Twitter has had a negative effect on Tesla’s image, especially among women and those aged 50 or older. According to Puls, a market research firm in Nuremberg, Germany, nearly half of Germans who are considering a new car or are actively looking for a new car said the Twitter acquisition has put them off considering a Tesla. The company surveyed 1,010 people in the first weeks of December.
Tesla’s new factory outside of Berlin produced 3,000 Model Ys last week, the company said on Twitter Monday. But that’s well below Mr. Musk’s goals.
Mr. Musk’s behavior in running Twitter has been a non-issue in China, by far the largest electric vehicle market. Like almost all Western social media platforms, Twitter is blocked in China.
On the contrary, from the perspective of China and the Communist Party, Mr. Musk has been a model for foreign executives. In October, Mr. Musk received praise from Chinese officials after suggesting that Taiwan become a special administrative zone of China as a way to hand over more control to Beijing. The comment drew a sharp rebuke from Taipei.
But there are signs that the cut-throat competition in China’s electric vehicle market may be taking its toll. In October, Tesla cut prices for its cars in China by up to 9 percent. The company said it was doing this because production costs had fallen.
Tesla’s sales in China through November were 59 percent higher than a year earlier, according to data from the China Passenger Car Association, but that was slower than the overall growth of “new energy vehicles” — a category that includes all-electric and plug-in cars. cars included. in hybrids. Sales of these vehicles have doubled, while BYD, the market leader, more than tripled its sales.
Tesla has been slower than Chinese rivals to roll out new models and features. Tesla introduced the Model 3 in China nearly three years ago and the Model Y about 18 months ago. In China, that delay between new models is an eternity and an opportunity for rivals.
“The target used to be on Tesla’s back, but now it’s bigger because they seem weaker,” said Tu Le, general manager of Beijing-based consulting firm Sino Auto Insights. “The participants smell blood.”
Ryan Mac reporting contributed.
