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For years, Elon Musk has been the not-so-secret weapon behind Tesla’s success. His reputation as a tireless technology maverick helped make zero-emission vehicles desirable, first to Silicon Valley audiences and then to the world. Now, his caustic online presence is considered an obstacle. But he can’t shoulder all the blame for the automaker’s problems.
Tesla announced Tuesday that first-quarter vehicle deliveries fell 8.5% from last year, the first year-over-year decline since the start of 2020. Shares fell 5%. They are down nearly 60% from their late 2021 peak.
Tesla blames supply problems, citing conflict in the Middle East and an arson fire at its Berlin factory. But a gap between production and delivery numbers suggests problems with demand.
Musk’s polarizing personality may turn off some customers. But several research firms have come to the same conclusion in previous years, even as the number of deliveries has increased. In 2021, Escalent wrote that it was a disadvantage for the brand. Last year, Tesla reported record deliveries, topping 1.8 million vehicles.
The real problem is the slowing adoption rates of electric vehicles. The stock price expects continued growth. This requires a large customer base, hence Tesla’s transition from high-end, six-figure vehicles to more affordable models and deals with Uber and Hertz. It’s aimed at a group of buyers more interested in price, range and access to charging stations than DeLorean-style doors and the promise of self-driving software.
Electric vehicles are even more expensive to produce than gasoline-powered cars, partly due to the high cost of the minerals needed for their batteries. Some of the government subsidies that filled the gap have been withdrawn. Meanwhile, global price wars are hurting all combatants. Tesla cut prices by up to 20% last year due to the proliferation of low-cost vehicles from China.
The good news is that profitability and high stock prices have allowed Tesla to place funds. It had more than $29 billion in cash and cash equivalents at the end of last year, up from less than $4 billion five years earlier. It has the wherewithal to edge out low-priced rivals while working on more affordable charging infrastructure and vehicles.
Musk’s plans are more bombastic than ever. At the realistic end this is a $25,000 vehicle and a cheaper assembly process. But one day, he says, Tesla and SpaceX may create something that’s “not even really a car.” Technoking is the reason Tesla remains the most distinctive automaker in the world.
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