Has Tesla run out of road? The electric car firm put plenty of spin on its annual results, talking bullishly about the new projects that were coming to fruition. Elon Musk’s company plans to go big on robots, pivot to Artificial Intelligence, and develop its self-driving unit. Yet there was no disguising the real message from its figures. With falling revenues, and the decision to scrap its premium S and X models, Musk’s pioneer of EVs is in deep trouble – and it may be too late to rescue the company now.
Fourth-quarter revenues slumped 3 percent to $24.9 billion
Fourth-quarter revenues slumped three percent to $24.9 billion, Tesla said after US markets closed yesterday – pushing revenues for the year down 3 percent to $94.8 billion. These certainly weren’t the kind of numbers that investors were hoping for.
Tesla’s loudmouth CEO Elon Musk was still in typically bullish form, arguing that while canceling two of its cars “was slightly sad,” it was “part of our shift to an autonomous future.” Even so, it was hard to get away from a simple point: the company that came from nowhere to become the largest auto maker in the world, at least measured by market value, is now in retreat.
Tesla – and Musk – won’t admit it, but the EV giant has at least three big problems.
Musk’s decision to go all in on President Trump has effectively trashed the brand. Tesla once appealed to affluent, environmentally aware consumers, and, rightly or wrongly, many of these people despise Trump and everything he represents. In Europe, Tesla’s sales were down by more than 20 percent last year even as overall sales of EVs rose strongly. Not many people want their friends and family to think their shiny new car is an endorsement of Musk and his mate in the White House.
Next, the Chinese manufacturers led by BYD – but with plenty more brands growing quickly – have stolen much of the market. These Chinese cars are cheaper and often better. BYD has already overtaken Tesla as the world’s largest seller of EVs and it seems unlikely that it will surrender that lead now.
Finally, the tide has tuned against Net Zero, with governments around the world rethinking how quickly they want to reduce carbon emissions, and how much it will cost. Trump’s decision to scale back EV subsidies is already hurting Tesla in the American market and Europe may not be far behind.
As a result, Tesla, a firm which could at one point do no wrong, faces a daunting series of challenges. Sure, robotics is an industry with huge potential – and self-driving cars may well be a massive industry although the market has still to be proved. But Tesla is fundamentally an auto manufacturer, and that business is now in retreat.
At a critical moment in the company’s development, when it needed to consolidate its grip on EVs, and push into the mass market, Musk allowed himself to become fatally distracted. He focused on politics, and side ventures such as SpaceX, when Tesla needed his full-time attention. The price will be a high one – because it is starting to look as if Tesla is finished.
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