BERLIN — Elon Musk struck a defiant tone on March 13, standing at the Tesla factory near Berlina week after an arsonist set fire to a high voltage tower and paralyzed production.
“You can't stop us,” Musk, the company's chief executive, told workers.
But there are growing signs that Tesla may not be as unstoppable as it seemed. The company's car sales are no longer growing at a breakneck pace. Chinese automakers and established brands like BMW and Volkswagen are flooding the market with electric cars. And Tesla has been slow to respond with new models.
Musk's numerous outside ventures and his penchant for making polarizing statements and attacking people he disagrees with have raised questions about how focused he remains on managing Tesla. Wall Street is increasingly worried: Tesla's share price has lost a third of its value this year, even as major stock indexes have hit record highs.
“A bet on Tesla has always been a bet on Musk,” said Eric Talley, a professor at Columbia Law School in New York who specializes in corporate law, governance and finance.
In an interview with former TV host Don Lemon, available via streaming on March 18, Musk said: “Stocks go up and down, but what really matters is whether we make and deliver great products”.
The week-long production stoppage at Tesla's Grünheide factory, the second this year, was only a temporary setback. But the drop in the stock price indicates that investors are reassessing Tesla's long-term prospects.
Chinese automakers such as BYD, SAIC and Geely Auto are launching dozens of new models. Analysts said Tesla's Cybertruck, a futuristic pickup truck that went on sale last year, would likely appeal to a relatively small group of buyers given its high price and unconventional design. And meanwhile Tesla is working on an electric car that would cost around $25,000 and is not expected to go on sale in large quantities until 2026.
Tesla has repeatedly adjusted prices in response to demand, cutting them to boost sales and then sometimes raising them again. Analysts say the strategy has eroded profits without doing much to boost revenue. The cuts have also reduced the resale value of Tesla cars.
Tesla faces intense competition in China, the world's largest auto market, where more than a third of new car sales are electric. BYD surpassed Tesla in global electric vehicle sales in the final three months of 2023 with a variety of cheap sedans, sport utility vehicles and subcompacts. Its Seagull model is priced at less than 12 thousand dollars in China.
Even after Tesla's price cuts, Shanghai-made Model 3 sedans and Model Y SUVs are much more expensive than many Chinese models. European and Chinese automakers are also introducing new electric vehicles. More than 150 will go on sale by the end of the year, according to HSBC.
At the same time, Tesla is not well positioned to compete in the luxury market because its cars don't offer as many amenities as those made by companies like BMW or Mercedes-Benz, said John Helveston, an assistant professor at George Washington University in Washington. who has studied Chinese car-buying habits.
“In China there are so many great options that Tesla just falls in the middle,” he said. “It is a car that is too expensive for the luxury it offers.”
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