How Tesla’s woes could benefit competitors like GM, Ford
After Tesla Inc.’s shares closed their worst year ever, they continued to fall Thursday — a clear signal of investor concerns swirling around the leading electric-vehicle maker even as competitors like General Motors Co. and Ford Motor Co. look to steal some of its business in 2023.
Tesla’s challenges are myriad: Gloomy macroeconomic conditions. Signs of softening demand. Headwinds in China, a key market for Tesla and EV sales broadly. Increasing scrutiny of its promises around the capabilities of Tesla’s advanced driver assistance system. An aging product lineup. An EV market that promises to be more competitive than ever.
And then there is the spillover from CEO Elon Musk’s messy takeover and management of social media site Twitter Inc., a purchase Musk funded by selling billions of dollars in Tesla stock. As these factors weigh on a company that has dominated the
EV market for more than a decade, experts say it could prove advantageous for legacy manufacturers like GM and Ford as they accelerate their electrification strategies and aim to overtake Tesla.
“The Twitter train wreck situation has cast a dark shadow on Tesla,” Wedbush Securities analyst Dan Ives said in an interview. “And ultimately it’s a spiderweb that Musk created around this $44 billion Twitter mistake that we believe has taken $600 (billion) to $700 billion of market cap off Tesla.”
He added: “Right now, there’s a lot of Cabernet and Champagne being drunk in the 313 area code as they watch this Musk implosion.”
The Austin, Texas-based company’s stock traded Thursday at around $108 per share after a decline of 70% from a year ago. The Detroit News sent a request for comment via email to Tesla, which disbanded its press office, and in response got a message that the account’s inbox was full.
Tesla customer Lex Friedman, 42, of Manalapan, New
Jersey, already owns a 2017 Tesla Model S and a 2019 Tesla Model X. He was considering a third Tesla for his daughter — until he started to question Musk.
“I still have a lot of affection for the cars themselves, but it feels a little bit like driving around while wearing a MAGA hat and waving a Trump flag ... which I wouldn’t want to do,” he said.
The sentiment underscores a dynamic that appeared to work well for a while: the
Tesla and Musk brands are inextricably intertwined. Musk’s headline-grabbing actions around the Twitter takeover — firing thousands of employees, appearing to change platform policies on the fly, using the platform to express certain political views — threatens to alienate customers like Friedman.
“Even though Musk on Twitter, there’s a cult hero status, by opening the political firestorm, it starts to alienate 50% of the population,”
Ives said. “And when you’re trying to sell to the masses, that’s not a good thing.”
One recent survey suggested that Tesla is becoming a partisan brand. The Wall Street Journal recently reported the results of a survey by Morning Consult indicating that the number of Democrats with a positive view of the EV maker has been trending downward, even as positive views among Republicans rise.
Before going with Tesla, Friedman had a Nissan Leaf and felt “real range anxiety” with its full charge of only 89 miles. He looked at Tesla’s products, which offered hundreds of miles on a single charge, and made the switch. Friedman isn’t in a rush to dump his Teslas, but he’s considering alternatives for his daughter. Knowing that he definitely wants a battery-electric vehicle for her, he’s looked at the Kia EV6, Hyundai Ioniq 5 and the Ford Mustang Mach-E.
The options Friedman is considering highlight another reality facing Tesla: EV buyers have more choices than ever before, with the prospect of many more to come in the showrooms of established dealer networks.
This year, GM is launching three electric vehicles: the Silverado, Blazer and Equinox EVs. Ford already has its top-selling Mach-E and the F-150 Lightning, and recently became the No. 2 EV maker in the U.S. There’s also competition from Japanese, Korean, European and other startup American automakers, including from the Volkswagen ID.4, Kia EV6 and Rivian’s R1T and R1S.
“Now, we actually have focused product that will easily go toe-to-toe with Tesla when it comes to the basics of range and performance,” said Ivan Drury, director of insights for auto information website Edmunds.com Inc. “The fact that (Elon’s) kind of unraveled at the same time as the automakers have fantastic products, I just can’t imagine a worse time for him, but a better time for the OEMs.”