Tesla: The race has long fulfilled many of Musk’s promises

Access: 6:58 pm | Reading time: 4 minutes

DElectric car maker Tesla will cut its workforce by more than ten percent. “There is nothing I hate more, but it has to be done,” writes company boss Elon Musk in an internal email. In fact, he had much more to do. Problems at the company have been mounting for several months. Car sales are no longer growing, pre-tax profits have plummeted, and Cybertruck production is currently stagnating in the US. Musk is countering this with price cuts, reductions in the “Full Self Driving” (FSD) driver assistance system and now by drastically cutting labor costs.

But the real problem lies deeper: Tesla has lost its leadership to the entire automotive industry. When it comes to technology, well-known manufacturers such as BMW and Mercedes-Benz are successful, Chinese competitors such as BYD are growing and industrializing quickly, and the CEO’s public outbursts are not particularly good for brand image.

Musk’s lofty goal of selling 20 million cars by 2030 is increasingly unrealistic. Last year the company sold 1.8 million vehicles, just below the Chinese brand Chery. Toyota and Volkswagen together sold nearly 20 million cars. Why the company is still worth $526 billion on the stock market, like all German automakers combined, can only be answered by loyal followers of Musk’s cult. Stock price has nothing to do with reliable facts.

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Of course, the slow growth of electromobility around the world is currently slowing Tesla’s progress. In the first quarter, sales of pure electric vehicles grew by only eleven percent overall, according to data from the Automotive Management Center in Bergisch Gladbach. The main problem for Tesla is not the market, but competition: BYD and others are growing, Tesla is shrinking. The Chinese competitor has a new and wider product range, a stronger position in the important Chinese sales market and more control over its supply chain.

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The Chinese have long delivered much of what Elon Musk has been promising for years. Now even Volkswagen can pass small models. Musk has been announcing for years that he wants to build a cheaper Model 2 than the Model 3. Recently, during a visit to Grünheide near Berlin, he showed that the car could be assembled there. But all these statements are not clear.

There will never be a phase without competition for Tesla again

At Volkswagen, on the other hand, the plan is set: The production of small electric cars will start next year; Two Volkswagens, Skoda and Cupra will come to market in 2026. Competitors Stellantis (Citroën, Fiat, Opel) and Renault are a little faster. Tesla will no longer have a phase without competition in the market segment, as with the Model 3 and Model Y. American manufacturers are behind when it comes to small cars, as is the case with pick-ups in the USA.

It will be even more important to maintain our role as pioneers in technology. This is what Musk is aiming for with his announcement that he will introduce a robotaxi on August 8. There is reason to doubt this. The FSD system operates in Level 2 autonomous driving categories; the driver must have one hand on the steering wheel. Robotaxis will be level 4, so Tesla will have to skip a level.

Until now, only BMW and Mercedes-Benz are on the road there: With level 3 assistant, the driver can turn away from traffic and the car takes over. It took two German producers just a year and a half to get approval. If Musk had more than one announcement, it would be a big surprise.

When it comes to advertising, Tesla is at least on top. But more than the stock market is not a hard currency. And for every Tesla boss’s vision of the future that is turned into reality by a competitor, the company’s value on the capital market is bound to drop.

This is especially painful for Germany. So far, Tesla has been the only car manufacturer in the country that has created large jobs. Now, according to “Handelsblatt”, one out of four jobs in Grünheide will be lost. This means that Tesla would overtake Volkswagen, unfortunately. The Wolfsburg-based group has set a target of 20 percent to reduce administrative staff.