The main cause of Tesla’s troubles
Elon Musk was once Tesla’s greatest strength. Now he is starting to look more like an albatross. —
A couple of weekends ago, I drove a Tesla for the first time. A family member had just purchased one, and he kindly let me take it around the block. It was quick, and quiet.
Standing in the driveway afterwards, there was talk about Tesla and its owner Elon Musk.
“Yeah, we hate the guy so much,” they said, “but it’s still the electric car to get.”
This is the state of things when it comes to Tesla these days: even the people buying the cars do so in spite of Musk rather than because of him.
Tesla was supposed to be to cars what Apple was to smartphones. Instead, Tesla is flailing. CEO Musk was once seriously spoken about as a real-life Iron Man Tony Stark. Now, it seems like Musk himself is to blame for a decline. His erratic behaviour, flirtation with the far right and distinct lack of focus may well squander the massive lead Tesla held — and all the while, rather than being seen as a superhero, he is increasingly seeming more like a villain.
Tesla’s success both as a company was born of at least two factors. One was that it made electric cars both practical and cool. The other thing was Musk himself. Whatever Musk did and said, his legion of tech bro fans adored.
Now, the company has entered an era in which problems keep piling up. This week when quarterly results were released, profits had dropped 55 per cent. In 2024, Tesla has laid off 14,000 people in an effort to streamline its business.
Then there is Musk’s pet project, the Cybertruck. It was promised to be an affordable but futuristic pickup truck. Two million preorders were placed. Upon release, it was more expensive, less powerful and less practical than advertised. It has since been plagued with a variety of issues. Then came a recall of every truck sold after it was discovered the accelerator pedal might stick at full throttle.
The total number affected was reported as a paltry 3,878 vehicles. No-one expected an $80,000 (U.S.) truck to light up the sales charts, but for one of the most talked about vehicle in years, that is an unmitigated disaster.
Even sales of their popular models are dropping. In the first quarter of this year, Tesla made 46,561 more cars than it sold.
It’s likely that at least part of what happening here is due to the rise in interest rates, which have made all cars less affordable.
But the buyers most likely to turn to EVs — environmentally minded progressives who are also early adopters — are starting to get turned off by Musk.
The tech figurehead has taken to posting a number of questionable things on X, what used to be called Twitter: first merely juvenile or simply unfunny jokes, but more recently, conspiracy theories and material favoured by the hard right and white supremacists such as the great replacement theory, an idea that whites are being replaced in order to mysteriously entrench leftleaning politics.
Now, we have data that Democrats in the U.S. are refusing to buy Teslas due to Musk’s politics.
All of this is underpinned by a growing awareness of Musk’s less than stellar relationship to the truth. In 2016, Musk demoed a solar roof tile that wasn’t even a working prototype, in part to drum up excitement for the purchase of Solar City, the company that made the shingles and for which Tesla paid $2.6 billion. Tesla said it would produce 1,000 solar roofs a week. By 2023, it had installed 3,000 total.
Musk has been promising that Teslas will autonomously drive themselves for years now. It even advertises the feature as “Full Self Driving.”
A Washington Post analysis last year stated that Tesla’s autopilot had been in play in at least 700 crashes, 17 of them fatal.
All of this is underpinned by the fact that Tesla is no longer the only option. Compelling offerings from Hyundai/Kia, the German luxury brands and Ford are now enticing buyers and their market share is climbing as Tesla’s falls.
That the market would grow more crowded was inevitable. There was, however, no reason that the CEO of Tesla himself should have become one of the reasons people would switch to other brands.
Now, in a seeming fit of desperation, Tesla’s newest hope is putting its faith in a cheaper model and an autonomous robotaxi based on this more affordable car.
But here, as in all other areas, Tesla faces a problem in its own CEO. Other, better self-driving tech uses Lidar (light detection and ranging) which is akin to radar with lasers.
Musk, in an effort to cut costs and insist on an ideal that mimicked human vision rather than what works, got rid of Lidar from Teslas. Now, Tesla’s full selfdriving lags competitors like Waymo because Musk had a vision and stuck to it regardless of whether it worked.
It’s symbolic. Musk was once Tesla’s greatest strength. Now he is starting to look more like an albatross.
And just as the cars promise to drive themselves but do not, so too does it seem like the company itself is being led by someone who insists he alone is right — but who is increasingly looking like the wrong person to lead what is still, for now, the world’s leading EV company.