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The share price is in free fall. Sales are sliding at an accelerating rate as customers lose interest. The Chinese are moving in, and the brand is tarnished. When Elon Musk unveils the quarterly results for Tesla later today, he will need to convince his shareholders he has a plan to turn the company around. The only trouble is, right now there is not much sign Musk has a clue what to do.
Musk is a brilliant entrepreneur. There is no question of that. But he has also spread himself too thin
Tesla’s results this week are expected to be its worst in years. Sales have already fallen by 8 percent in the first three months of this year, ending a decade of rapid expansion. Profit margins are getting squeezed. And Tesla’s share price has already fallen by 40 percent since the start of the year as investors bail out. The outlook is getting worse all the time. Electric vehicle sales are plummeting as drivers lose interest. A new wave of cheap — but still high quality — Chinese built models are flooding the market. And Musk’s combative, libertarian politics has alienated Tesla’s affluent, liberal customers. It is a toxic mix, and one that suggests the company could be in a lot of trouble.
Against that backdrop, investors want to know if Elon Musk has a clear plan to turn the business around. But what is it exactly? He might fire all the engineers. He could change the name to Y or Z. Or perhaps even move the headquarters to Mars. Based on his performance at X, formerly known as Twitter, with Musk at the helm almost anything is possible. In reality, his management of X, while entertaining for outsiders, has so far yielded few positive results, with revenues plummeting, and its core users alienated.
At Tesla, Musk will need to do far better. Initially, the plan was to focus on manufacturing a far cheaper car, the Model 2, priced at around $25,000. That could take Tesla into the mass market for the first time, and fend off competition from the Chinese automakers. But Musk appears to have lost interest, and is now talking up the prospects of a self-driving Tesla as the next big technological breakthrough, and one that will kick-start growth again. Well, perhaps it will. Yet the record of self-driving vehicles is so far disastrous. Anyone in a robot controlled Tesla will be mainly worrying about whether they will run out of charge on the battery or smash into a wall first.
Musk is a brilliant entrepreneur. There is no question of that. But he has also spread himself too thin, splitting his time between multiple businesses. Right now, Tesla is a huge company that is quickly running into trouble. It may need a radical change of strategy. At some point the board may have to make an unthinkable move — and recognize that Musk needs to be replaced if Tesla is to be rescued.
This article was originally published on The Spectator’s UK website.
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