Background: It doesn’t work for the electric pioneer: The Tesla problems

The Tesla share was one of the losers in 2022. While it was still over 384 euros last spring, the US share fell to just over 100 euros in less than a year – more than 60 percent minus. That meant a loss of market value of more than 750 billion euros. The Americans also fell short of their expectations when it came to sales – especially on the Chinese market. In order to boost the sluggish sales, the prices of the Model 3 and Model Y vehicles were reduced by a total of up to 20 percent for the second time. Unsurprisingly, Chinese customers who had recently bought their Tesla electric models took to the streets to protest. The fact that Tesla has been profitable since the third quarter of 2019 is little more than a side effect for many customers, and more and more analysts are taking a more critical view of Tesla than ever before.

Things are currently anything but smooth at Tesla. The reasons are much more complex than a CEO who made a name for himself in the fourth quarter of 2022 with the takeover of the short message service Twitter than with the reorientation of the brand. Many customers resent Musk’s takeover of Twitter, because the news channel, through which the busy CEO is only too happy to convey his views to the world, is particularly popular in the USA. “Elon Musk shouldn’t start making politics now, but building cars,” criticized many customers. When it comes to the cars themselves, however, Tesla has long since lost its lead. This applies not only to the rather subordinate important market in Europe, where brands such as Audi, BMW, Mercedes, Polestar and Porsche have long since caught up and overtaken. In the USA, too, the former electric sleepers from General Motors and Ford have long since pulled themselves together and launched models that can definitely compete with the Tesla models. With the announcements made last week at the Consumer Electronic Show, Stellantis is now also announcing that it will be focusing on electromobility worldwide, which is putting Tesla under further pressure.

Things are even worse in China. Every few weeks a new electrical manufacturer springs up here or one of the large corporations founds a new brand. In addition to weakening the established German premium trio, many only have one opponent in their sights: Tesla. The Chinese manufacturers have not only been technologically up to date for a long time, they also don’t have to hide when it comes to design. Incidentally, Tesla missed the leap to modern 800-volt charging technology. This is currently available for vehicles from Audi, Porsche, Kia and Hyundai, among others – others want to follow in 2023. To make matters worse, the sales prices of the Chinese competitors are well below the Tesla level – not only because of the local production. The Americans also produce in the greater Shanghai area and are trying to gradually increase the proportion of local components. In order not to completely lose the ground under our feet, the prices of the two bestsellers Model 3 and Model Y have been noticeably reduced. Musk’s long-heralded level three driver assistance system is still not on offer, and the proclaimed hands-free coast-to-coast drive in the US is still nowhere in sight.

Tesla is slowly falling on its feet that the manageable model portfolio first had to be put on a solid international footing. The production facilities do not run satisfactorily everywhere and then there are outdated models that hardly any car manufacturer can afford anymore. The Model S should have been replaced long ago and even the delayed market launch of the top model Plaid in Europe ensures neither a significant image gain nor the necessary sales figures. The situation is very similar with the Model X, whose driving performance is not only a show in the plaid version, but the luxury crossover is too expensive and too heavy. It is of little consolation that most of the technical problems of the rear gullwing now appear to have been resolved. The Model X would also have to be slowly replaced in view of the strong competition in Asia, Europe and the USA. But that is just as little planned as the replacement of the veteran Model S, which can hardly keep up with the technical impact of the competition such as the Audi E-Tron GT, BMW i7 or Mercedes EQS. However, the most dangerous competition still comes from within the company, because most potential Model S customers are satisfied with the slightly worse and much more modern Model 3. Not only is it significantly cheaper and now also available in Europe in an inexpensive basic version, but it also generates significantly less contribution margin for Tesla. A problem that the Model X is also struggling with. Most are satisfied with the Tesla Model Y.

Even before the turn of the decade, it was hard to foresee that Tesla would have the butter taken off its bread with the full-size pick-ups, especially in the home market of the USA. The Ford F-150 Lightning turned a painful nose at the already more than polarizing cybertruck. The Chevrolet Silverado EV will soon be the next best-selling electric pickup, and Stellantis CEO Carlos Tavares announced at the CES in Las Vegas that the Ram 1500 Revolution BEV would be launched in 2023. Hard times for Tesla, who confidently communicate that there are more than a million pre-orders for the Cybertruck. Many a customer has meanwhile switched to the F-150 Lightning, which still has great chances of coming to Europe. This is currently not planned for the Tesla Cybertruck. The Tesla Semi electric truck has only just entered the US market in homeopathic doses after some delays. As with the Cybertruck, it will probably take well into 2024 before it makes significant quantities.

The situation is different with a small crossover, which is always a topic at Tesla. A little brother of the Model Y would have the best chance of becoming a bestseller in Europe and turning the tide at prices under 35,000 euros. The question remains whether Tesla can delay a CEO change for a long time, because more and more Tesla customers are convinced of the products, but want a new head at the Tesla wheel. Or at least a CEO for whom Tesla is again the number one place to work. At least here, a quick improvement seems to be in sight, because Elon Musk wants to give up the Twitter leadership promptly after a user vote. However, it is doubtful whether he will also stay out of the management afterwards.