Elon Musk has been running Tesla since 2014. In the early part of his “reign,” the entrepreneur transformed the company into the market leader in electric cars and one of the most innovative companies in the world. But in recent years, Elon Musk’s actions, many of them erratic, have hurt Tesla’s performance and image.
Business Insider spoke to Mark, owner of a Tesla Model Y SUV.
“I feel bad driving my new Tesla Model Y,” he said.
In 2022, Tesla’s chief announced price increases on all models, citing rising material and component costs. When he was able to take advantage of new government subsidy programs, Musk decided to lower prices again. In the case of Mark’s car, the price dropped from $65,900 to $58,490. A few weeks later the car cost even less – $52,990. So in just a few months his Model Y ended up $13,000 cheaper.
Tesla fans were not thrilled with these price cuts. Many of them, like Mark, bought the cars relatively recently and feel cheated by the company they supported during tough times. The automaker has gone through repeated misses on when it was supposed to deliver certain models, has been investigated by federal authorities, and has many issues surrounding build quality (a Model Y blew the roof off right after it was picked up from the dealership). What’s more, the value of new cars has dropped rapidly overnight on the used market because of Tesla’s announced price cuts.
Many of these Tesla fans also own stock in the company. Some of them sold them because they were disappointed with Musk’s actions. Many feel Tesla is turning from a young, innovative company into just another run-of-the-mill automaker. And the man at the helm of Tesla, once seen as an “Iron Man” who will take humans to Mars, is showing his human frailties every day.
Many of Tesla’s problems could be blamed on the fact that Musk isn’t running the company much anymore, perhaps. He bought the social media network Twitter last year and spends a lot of time there. To fund the $44 billion acquisition, the billionaire sold $22.9 billion worth of Tesla stock. Because of the controversies Musk sparked at Twitter and the company’s poor results in some quarters, Tesla’s shares have been in decline.
Competition has caught up with Tesla and in some areas has overtaken it
Tesla has also lost in recent years the big advantages it had: software and long range. There are now companies on the market, like Mercedes-Benz, with more advanced software than that developed by the Elon Musk-led company. The German brand has already received approval to use Level 3 autonomy on public roads in the US and Germany. Tesla is still at Level 2, and was recently forced to recall 362,000 cars in which the Full Self-Driving (FSD) system can cause accidents.
With Level 3 autonomy, the car drives itself most of the time, requiring driver intervention only in very difficult situations.
What’s more, Hyundai is preparing to launch the Ioniq 6, which will rival Tesla’s cheapest vehicle offering, the Model 3. The South Korean car offers, in its Long Range version, greater range than Tesla’s similar model, at a lower price.
Also read: “Emperor” Elon Musk is naked? What’s next for The Boring Company, his company that promised to revolutionize transportation
At the same time, Tesla is no longer the only company on the market offering cars with a range of more than 650 km, capable of rivaling cars equipped with internal combustion engines. Such models are offered by Mercedes-Benz, Lucid and Nio, among others.
Tesla also no longer has the advantage of the Supercharger network except in the US. In many other countries where Elon Musk’s company is present there are rival networks of charging stations for electric cars that are much more developed.
Ten years ago Tesla was also impressing with its cars’ huge touchscreen displays and OTA (over-the-air) updates. Now, most electric cars incorporate these technologies as standard features.
All is not lost for Tesla
“Competition has started to eat into Tesla’s market share,” said Martin French, managing director at consulting firm Berylls. “If you’re a consumer, this is good news. There are a lot of really good electric cars to choose from,” he told Insider.
Tesla still has its strengths, according to French. It offers regular software updates and can deliver expensive new features on the software side, which its customers accept. According to French, no other company can successfully offer a software package that costs $11,000 right now.
What’s more, the company is preparing to launch a $25,000 electric car, likely to be called the Model 2. It will be difficult for the competition to come up with a similar offering anytime soon. Tesla has been working on a new battery pack for a few years now, and it’s priced 50% lower. This is the most expensive component in an electric car.
What’s more, the automaker could see high demand again after it launches long-awaited models like the Roadster and Cybertruck, with radically different designs from the models in its current lineup. Today, it’s hard for ordinary people to tell the difference in a parking lot between Tesla Model 3 and Model S or Tesla Model X and Model Y. And many customers want to differentiate themselves.