- Tesla has boosted production capacity, but its inventories appear to be rising as new and used prices—and residual values—have slipped.
- Still, Tesla remains by far the best-selling luxury brand in the US, with 525,000 deliveries expected here for all of 2022, per Cox Automotive.
- Musk’s current detractors are divided between those with distaste for his politics and apparent interest in turning Twitter into an extremist-politics free-for-all, and those concerned about Tesla’s future.
Long before Tesla Motors made its first annual profit in 2019, Wall Street analysts justified its sky-high stock value on the automaker’s complete dominance of the electric-vehicle market. Theory was that when the EV revolution comes, Tesla will have a bigger share of the auto market than General Motors had after World War II (more than 60% at one point).
Thanks in part to the pandemic and corresponding hikes in the price of gasoline-powered vehicles, the revolution appears to be upon us. EV sales in the US are expected to reach 800,000 by the end of the year, according to Cox Automotive—an increase of about 70% over 2021.
Tesla has boosted production capacity since its move from Fremont, California, to Austin, Texas, and has added assembly plants in Germany for the European market and in China for Asia. But in recent months its inventories appear to be rising as new and used prices—and residual values—have slipped.
Tesla remains by far and away the best-selling luxury brand in the US, with 525,000 deliveries expected here for all of 2022, per Cox Automotive. Move the company from “luxury brand” to the “electric vehicle” category, and Tesla’s segment dominance suddenly faces a lot of pressure.
Ford CEO Jim Farley says his company will deliver 600,000 EVs globally by the end of 2023, while GM CEO Mary Barra promises 1 million North American-produced EVs by 2025, and with profit margins rivaling those of its internal-combustion vehicles.
True, GM’s deadline has slipped from calendar 2024, reportedly a result of the pandemic shutdowns and supply-chain problems, but EV aficionados should be used to this. How’s that Tesla Cybertruck coming along?
In case pressure from Detroit (as well as from Volkswagen, Hyundai, Kia, and numerous newcomers) isn’t enough, Tesla CEO Elon Musk appears to be contributing to his EV maker’s quickly diminishing prospects for market dominance.
Since Musk first made his offer to buy Twitter for $44 billion last April and restore controversial users including former President Donald Trump to the platform under the guise of “free-speech absolutism,” the shine has begun to fade off Tesla’s finish.
“Tesla’s corporate buffoonery definitely makes me less likely to buy another one,” says a Model Y owner we’ll call “Pat,” and who agreed to comment on the condition of anonymity. “I regret any association (by owning a Tesla) with their man-child CEO, but I’m probably more concerned about Tesla’s disregard for any rules it finds inconvenient. They think they’re above the law and I hate endorsing that with my money.”
“Pat” follows Tesla sub-Reddits, where “MudaThompson” recently said, “In 6 months, I went from never buying a non-Tesla again, to never buying a Tesla again.”
Today, Barron’s reported that Musk’s first margin call from bankers for his purchase of Twitter was likely due, which means he would have to come up with a significant portion of the purchase price financed, or he would have to provide bankers additional collateral—more cut-value Tesla stock.
The high-finance newspaper reports on an “apparent” email Musk sent to Tesla employees December 28 that admonished them “to ignore gyrations in the company’s stock and focus on shipping as many cars as possible as the end of the quarter, and year, approaches.” (Tesla did not immediately respond to Barron’s for comment.)
Tesla stock hit an all-time high of $402.67 per share on November 2, 2021, (adjusted for a 3:1 split in 2022), and by the end of ’22 was hovering around $120 per share. Today, Tesla stock regained some of its value—up 8% to $121.82.
That’s a market cap of nearly $1.278 trillion 14 months ago, down to a still-healthy $381 billion today. (Ford and GM have a combined market value of just over $88 billion.)
It’s clear that Musk’s current detractors are split somewhere between those with distaste for his politics and apparent interest in turning Twitter into an extremist-politics free-for-all, and those concerned about Tesla’s future and its stock value (including short-sellers’ schadenfreude).
Perhaps extracting Musk as CEO of Tesla would help restore some of the glow to its reputation as the premier EV maker that pushed other automakers to respond. To that point, “Pat” is interested in the Cadillac Lyriq as a potential replacement for the Model Y but adds that—Musk’s Twitter antics aside—other EV manufacturers cannot match Tesla engineering for battery efficiency.
“Tesla, to me, is simply out-engineering every other carmaker. My Model Y has a relentless simplification that takes some getting used to, but almost every quirk makes sense to me in the context of efficiency and range.”
Do you think CEO Elon Musk is contributing to Tesla’s quickly diminishing prospects for EV market dominance? Please comment below.
