It used to seem as though Tesla could do no wrong.
It grew from being a tech start-up to a mass-market automaker in little over ten years, investing billions in its clean energy division and witnessing a sharp increase in value.However, the business is currently having trouble with declining auto sales, fierce competition from Chinese automakers, and issues with its much-discussed Cybertruck.
Reduced sales have impacted the company's earnings and revenues. Since the beginning of the year, the share price has decreased by over 25%.
It has lowered pricing in significant areas and is currently letting go of 14,000 workers, or 10% of its total staff worldwide. Senior executives and the whole team behind its highly regarded supercharger are among those impacted.
Is this only a hiccup in the road, or are people abandoning the Tesla train?
"It's about breaking a spell," Elon Musk clarified in June 2012 to a group of people who had been invited especially to Tesla's California facility.
"The world has been under the illusion that electric cars can't be as good as gasoline cars," he stated.
Speaking at the introduction of the new Tesla Model S, which he vowed would smash that illusion, was Elon Musk. It was not a meaningless assurance.
Electric automobiles at the time were known for being incredibly slow, uninspired, unusable, and having a very short driving range.
While some new models, like the Nissan Leaf, were beginning to gain a devoted following, they had not yet had much of an effect on the larger market.
The Model S was a powerful vehicle that could go up to 265 miles on a single charge and featured sportscar performance. Although the lowest performing model cost $57,000 (£47,000) in the US, it wasn't inexpensive, but it was definitely worth it.
Four other models have been released by Tesla since then: the Model X SUV, the "affordable" Model 3 and Model Y, and the Cybertruck.
In addition to its original factory in Fremont, California, and many other US sites, it now has massive, so-called gigafactories constructing automobiles in Shanghai and Berlin. With 1.8 million cars delivered last year, it appears to have solidified its position as a mass-market manufacturer.
However, that is part of the issue, according to Professor Peter Wells, director of Cardiff University's Centre for Automotive Industry Research. "When Tesla first emerged, it had an exciting new product, a charismatic CEO, and it came across as really pioneering," he recalls.
Currently, the business "is no longer the entrepreneurial new entrant and upstart disrupter, but increasingly an industry incumbent with all the challenges this brings when faced with a growing array of competitors in the same market space" .
Prof. Wells claims that while BYD, another Chinese company, delivers good performance at lower prices, other businesses, like China's Nio, are delivering more intriguing items. "Basically, the world has caught up with Tesla," he states.
Without a question, the level of competitiveness has increased significantly. After VW was rocked by the diesel emissions crisis in 2015, the company started investing heavily in electric cars.
And other well-known manufacturers soon followed, as governments all around the world started to give serious consideration to outright prohibiting the sale of new gasoline and diesel models. Consumers now have a wide choice of options when searching for an electric vehicle with respectable performance and range.
Conversely, Chinese leaders have long supported the development of EVs because they believe it will allow them to capture a sizable portion of the worldwide market. As a result, companies like BYD, which surpassed Tesla to become the world's largest producer of electric vehicles at the end of last year, have seen tremendous growth.
Simultaneously, as the electric vehicle (EV) market has become stronger, subsidies that formerly enabled consumers to purchase EVs have been reduced in numerous regions of the world. That could be one of the causes of the recent slowdown in the EV market's explosive growth and the manufacturers' need to lower their pricing.
Matthias Schmidt, an independent auto analyst, claims that Tesla has undoubtedly been impacted by this.
"Finance ministers who were previously happy to offer attractive incentives for the purchase of a battery electric vehicle in a market environment that appeared bare-shelved, with essentially a Tesla or a Tesla on offer, are now slamming their purses shut," according to him.
Germany is one market where this seems to have had a significant impact. A December sudden end was made to a subsidy program that offered thousands of euros off the cost of a new electric vehicle.
In the first three months of this year, EV sales plummeted drastically, with Tesla experiencing a 36% decline in comparison to the same period in 2023.
Currently, the question is whether Tesla can reclaim its lost ground. Elon Musk, the company's unconventional CEO, seems to be banking on the business to become a pioneer in autonomous vehicles and a supplier of driverless robot taxis.
He posted the following last month on his social networking platform, X: "Going all in for autonomy is a glaringly obvious move, but it's not quite betting the company." All other things are only modifications of a horse-drawn vehicle.
0 Comments