New York (AFP) – Tesla, the Elon Musk-run auto company, has had a turbulent time recently, fueled by its chief executive’s close ties to Donald Trump and increased electric vehicle competition. The mounting issues have sent the company’s share price tumbling in recent weeks. Here are some of the biggest challenges it faces:
– Pole position under threat –
Gone are the days when Tesla was far and away the world leader in electric vehicle sales. China’s BYD is now snapping at Tesla’s heels, selling 1.76 million vehicles in 2024 — up 12 percent year-on-year — to Tesla’s 1.79 million, a one percent decline. Including hybrid vehicles, BYD’s revenues actually exceeded the US auto maker’s last year, $107.2 billion to $97.7 billion. To make matters worse, Musk’s leading role in the Trump administration — and vocal support for far-right politics in Europe — appears to be hampering Tesla’s bottom line. The company’s registrations fell 49 percent year-on-year in January and February in the European Union. Tesla has “moderated” its initial forecast of a 20-to-30 percent sales increase in 2025, according to CFRA Research analyst Garrett Nelson. “We’re looking at a 5 percent decline but it could be much more than that,” he told AFP.
– Potholes –
In the United States, France, and Germany, Tesla stores, charging stations, and vehicles have been vandalized in recent weeks. Protests have also been called in which participants have criticized the world’s richest person for his heavy hand in US and international politics. In New York, one recent sign asserted that “Tesla finances fascism” and called for a boycott of its cars. And in Germany, where an arson attack in March 2024 halted production at Tesla’s plant in Germany, Musk has come under heavy criticism for his support of the far-right Alternative for Germany (AfD) party in the parliamentary elections. “The biggest concern now is regarding the brand value,” said Nelson from CFRA. “Picking a side, Republican or Democrat, can really do a lot of damage,” he added, pointing to the way Tesla’s stock had fallen “dramatically,” losing around a third of its value since the start of the year. Tesla is also suffering because the range of vehicles it has for sale has remained largely unchanged since the Model Y was released in 2020. “Lack of innovation, lack of new models,” Nelson said, adding this was a “big reason why Tesla has lost market share in China to BYD.” The Cybertruck was the only new model to be released recently, but its sales had been “very disappointing,” he said. The pickup truck, which was plagued by delays, was finally released at the end of 2023, but has since suffered a series of recalls. The latest, on March 20, concerned all 46,096 Cybertrucks currently in circulation, whose body panels were in danger of coming unstuck. Tesla’s long-promised low-cost model still seems to be a long way off.
– Escape routes –
The brand’s salvation could come from its full self-driving (FSD) feature, where it has a “major advantage” that represents a “huge market opportunity,” with a global market estimated at $5 trillion, Nelson said. He thinks Tesla is in a stronger position than Google’s Waymo, whose robotaxis have operated in several US cities since 2010. However, the company’s much-trailed Cybercab competitor is still several months away from starting road trials in Austin, Texas. The Trump administration is preparing a “new” federal regulatory framework for fully autonomous driving, Nelson said, adding it has also begun to reduce support for the energy transition, which should benefit Tesla given its comparative advantage in the United States. In his view, Tesla and Musk both enjoy the unwavering loyalty of shareholders, but to reassure them, some sort of senior executive should be appointed to take care of the day-to-day running of the company from Musk. “He is spending most of his time in Washington, D.C., right now,” Nelson said. “He is less focused on the day-to-day of what’s happening operationally at such a critical time in Tesla’s history.”
© 2024 AFP
