HomeAutomobile2024, annus horribilis for Tesla?

2024, annus horribilis for Tesla?

EXPERT ADVICE. Tesla’s share price has fallen 30% since the beginning of 2024. Is this the beginning of the end for Elon Musk and the automaker specializing in electric cars?

Elon Musk is under pressure as he approaches the release of his first quarter 2024 financial results on April 23. As the founder of Tesla himself announced, this year will not be good in terms of sales for Tesla.

The world’s best-selling model in 2023, the Model Y, is running out of steam. It needs an update, like the Model 3 in 2023. In the meantime, the company will reduce its workforce by 10% (or about 14,000 people) to reduce its costs and try to preserve its profitability.

However, it is not certain that this is what shareholders expect from a “tech” stock. It is growth prospects that generally drive share prices. And there comes a setback for Tesla, a setback amplified by the departures of important executives. Mention must be made of Drew Baglino, an 18-year Tesla veteran. He worked as vice president of engineering and even participated in the presentation of the third part of the Tesla plan in March 2023.

However, things must be put into perspective: the share of electric vehicles will represent less than 10% of vehicles produced worldwide in 2024. Consequently, the thermal engine remains the reference for the vast majority of drivers. The electric car, like any new product, first convinced the innovators (2.5% of the population), that is, the Tesla fans.

Then, the pioneers of new technologies took over. However, the majority of drivers still need to be convinced. When will it be ready to go electric? According to various comments, Elon Musk seems to think, without saying it so clearly, that the geopolitical and economic context is postponing for a few years the transition to electric energy for a significant part of the population in China, the United States and Europe. . So for Tesla, it’s time to lower the sail and turn around.

However, development in accelerated mode…

In two years, between 2021 and 2023, Tesla has doubled its vehicle sales. To this end, the manufacturer opened two vehicle assembly plants: Austin, Texas and Berlin, Germany. Additionally, a new battery manufacturing plant opened, also in Austin, with the start of production of a new cell. Finally, still on the production side, Tesla has begun construction of a lithium refining plant in Corpus Christi, Texas, to meet the Biden administration’s location requirements in the United States and receive subsidies.

In terms of vehicles, Tesla has thoroughly renewed its Model 3 and has addressed the pickup market with the Cybertruck. The number of employees also doubled during these two years. After this brazen growth, the manufacturer finds itself at a crossroads.

To compete with other manufacturers, Tesla would need a city car, which is the largest segment in the world, with 700 million registered vehicles. But margins are compressed, the risks are high with the need to build a new assembly plant and Elon Musk is hesitant. Next, it seems that Tesla is interested in utility vehicles with 300 million units on the roads around the world. The manufacturer could revolutionize this market segment. However, as always, Musk wants to change the situation.

Their obsession is to offer automated driving to Tesla drivers, put a fully autonomous shuttle on the road and regain the advantage over their competitors. Consumers would pay for a mobility service, depending on the kilometers traveled. Only in the United States and under driver supervision, automated driving (FSD Supervised) is available for $99 per month. The testimonies of the first users are positive, although improvements are still expected to perfect the system.

The challenge for the Tesla CEO is the autonomous shuttle that will be presented on August 8. The number 8 is a lucky charm in China. Would Elon Musk become superstitious or would the first deployment be in the Middle Kingdom? Answers in a few months.

Author: Franck Cazenave, author of the book Tesla Killed the Car!
Source: BFM TV

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