Stocks hit a 2-year low, about to lose dominance in the electric vehicle industry, CEO neglects management: Where will Tesla go?

The world’s most valuable automaker is facing a host of problems. This further highlights the “kink” in Tesla’s position as a technology leader in the auto industry, leading analysts and investors to question whether the company can continue to dominate. market value of electric vehicles or not.

Was Musk too focused on Twitter?

Tesla is working to ramp up production at new factories in Austin, Texas and outside Berlin. The Covid epidemic prevention regulations and supply chain disruptions have caused Tesla’s factory in Shanghai to be constantly closed.

As interest rates soar and the risk of a global recession looms, demand for Tesla cars appears to be waning. Just a few months ago, buyers were still willing to wait months to get their hands on a Tesla. Now, these cars can be delivered in just a few days, which analysts say is indicative of poor demand.

However, Musk is too focused on Twitter – a company he admits he bought for too high a price. Last weekend, he created a poll on the social network on whether he should step down as CEO of Twitter and the majority chose “yes”.

According to Axel Schimidt, senior executive at consulting firm Accenture, managing Tesla “is not a part-time job in these tumultuous and challenging times.”

Musk remains an admirer of the auto industry, thanks to the way he proved to the world that battery-powered vehicles are still stylish, packed with cool features and, importantly, capable. profitability. Tesla’s success has prompted big companies like General Motors, Ford and Daimler to try to compete by launching their own electric vehicles.

Tesla bears many of Musk’s personal touches, in the same way that Henry Ford “personified” the automaker that bears his name. As co-founder, CEO and largest shareholder, Musk can make quick decisions and has helped Tesla rise to the top in battery technology and software over traditional automakers.

However, it is not clear who is replacing Musk to run Tesla while he is “busy” on Twitter. Tesla listed only three senior executives, including Musk, CFO Zachary Kirkhorn and senior vice president of engineering Andrew Baglino.

Garrett Nelson, equity research analyst at CFRA, an investment research firm, said: “Musk’s personal footprint is so great that people often assume the company would be weak without him. and nothing happens without his approval.” However, Nelson disagrees with that view.

Investor confidence declines

Meanwhile, Tesla’s stock price is down 66% from its November 2021 peak at the end of December 21 trading. This shows that investors are losing confidence in both the company and Musk. On December 20 alone, the electric car company’s stock lost 8%.

Tesla stock movements from December 31, 2021 to present.

Part of that is due to concerns that Musk will have to sell more Tesla shares to continue paying for the Twitter acquisition. To acquire this social networking company, Musk had to sell $23 billion worth of Tesla shares, causing panic in the market and driving the stock price down.

Tesla no longer alone dominates the electric car market

And now, when traditional car manufacturers also put “on the shelves” of good quality electric cars, this market is no longer just Tesla’s.

In the US, electric vehicles from Ford, General Motors and Hyundai have far surpassed Tesla’s lead. Competition is even tougher this year with the introduction of models like the Cadillac Lyriq and Nissan Ariya.

This negative development is also a sign that investors no longer believe in Musk’s promise that Tesla will sell 20 million vehicles a year by 2030, on par with VW and Toyota combined. It was this dream of global domination that helped Tesla reach a market capitalization of $ 1 billion, but now only half. Recently, Musk said Tesla stock fell due to high interest rates and the risk of an economic recession.

In China, Tesla faces a challenge from domestic manufacturers like BYD, which this year stopped making internal combustion engine vehicles to focus entirely on electric vehicles, and sales have surpassed Tesla. In Europe, Volkswagen and subsidiaries like Audi have sold more electric vehicles than Tesla, although the Model Y and Model 3 remain the most popular all-electric models.

A VW factory in Hanover, Germany.

In an industry that thrives on new products, Tesla hasn’t introduced a personal car since the Model Y, a sport utility vehicle, in 2020. The company announced it would sell the Cybertruck. in 2023. However, this pickup is still launched after products from Ford, Rivian and GM.

Musk still has a reputation as a “sunshine and rain” boss, but the company’s leadership style has become clearer since he took over Twitter. Musk demanded the layoffs or unpaid leave of more than half of the staff and said those who stay will have to work “intensity”.

Problems at Twitter have damaged his reputation for excellence. Even his provocative tweets risk driving potential Tesla car buyers away from the brand.

Joya Banerjee, financial advisor on gender-based violence at the humanitarian organization CARE in Washington, considered buying a Tesla when she was planning to own an electric car last year. However, even before Musk bought Twitter, she stopped the idea because she realized that Musk had too much “ego”, sexist and too much power. She chose the Ford Mustang Mach-E.

While Tesla still leads in sales of electric vehicles in Germany, the market is slowly being dominated by other players. The fact that many people expressed negative attitudes towards Musk began to affect car owners in this country. The majority said the billionaire’s takeover of Twitter negatively affected Tesla’s image, especially among women and those 50 and older.

According to Puls – a market research company based in Nuremberg (Germany), almost half of the 1,010 Germans surveyed in the first weeks of December are considering or looking to buy a new car right away. know that the Tesla boss’s purchase of Twitter makes them no longer want to buy the company’s car.

Tesla’s new factory on the outskirts of Berlin produced 3,000 Model Ys last week, but still far below Musk’s target.

Musk remains a popular figure in China, regarded as the model foreign CEO. But there are signs that fierce competition in China’s electric vehicle market could have dire consequences. In October, Tesla lowered the price of cars in this market by as much as 9% and said it did so only because production costs had dropped.

Meanwhile, Tesla’s vehicle sales in China as of November were 59 percent higher than a year earlier, according to data from the China Passenger Car Association. However, this figure is slower than the overall growth of “new energy vehicles” – which includes all-electric and hybrid vehicles. Sales in this category have doubled and BYD is the market leader.

Tesla has lagged behind rivals in China in launching new models and features. It launched the Model 3 in the mainland almost 3 years ago and the Model Y about 18 months ago. And in this market, the absence of new models is a lag and becomes an opportunity for other manufacturers.

Refer to NYT