Peak Tesla?
It sure seems like it.
I don’t want to jinx the company, but it is highly likely that it is passed its best.
The data is looking increasingly gloomy and could set the stage for an even larger drop into irrelevance.
In short, it’s definitely not looking too bright for the company that Elon Musk built.
Tesla only delivered 386,810 vehicles from January through March 2024, almost 9% below the 423,000 it sold in the same quarter of last year.
The drop in sales makes Apple's diminishing demand look like a drop in an ocean.
EV competition is catching up and demand has wavered as consumers’ cash is tangled up in other parts of the economy namely necessities.
Then there is the realization that the giant first wave of EV adoptees is a barren second wave.
The second wave might not even come at all and if it does, it could be years down the road when Tesla is forced to pour billions into developing a new “killer” EV.
Even someone like my oldest son is not interested in EVs and rather drive combustion-engine-based Ferraris or Lamborghinis.
EVs aren’t for everyone and the industry didn’t budget or scale for that scenario.
The EV industry always thought there would be a horse drinking from the bucket.
Are its EVs going stale or is the style just outdated at this point?
I know tech moves on quickly, but this would set new records.
High interest rates have also put a dent into demand as financing a Tesla isn’t what it used to be.
Just a few months ago, CEO Elon Musk posted that “most people don’t love to buy cars in the middle of winter” as he offered a $1,000 incentive. Tesla has also begun experimenting with advertising and has gone to greater lengths to educate consumers about its lineup.
Tesla never used to reach out to consumers.
Their cars used to sell themselves.
Remember when Tesla refused to sell their cars in dealerships and thought just put them online and they would fly off the shelves.
The Model Y sport utility vehicle and Model 3 sedan accounted for 96% of deliveries in the fourth quarter.
Tesla expanded its offerings late last year with the introduction of the stainless steel-clad Cybertruck in the US.
Despite the challenges, Tesla still managed to reclaim its title as the world’s largest EV seller after being surpassed by China’s BYD Co. at the end of last year.
Tesla encountered bottlenecks in its operation last quarter such as Houthi militia attacks that disrupted its component supply in the Red Sea, leading to a temporary halt in production at its German factory.
Management and service staff are keen to demonstrate the latest version of the company's premium driver assistance system, marketed as Full Self-Driving, which still requires driver supervision.
Tesla's stock has been nose-diving while the rest of big tech has pulled away from the laggards.
The EV maker has lost around a third of its value and it seems like there is no end in sight.
If any readers are interested in investing in big tech now, then I would avoid Tesla and go into something more aligned with AI.
Tesla will need to pour billions into revamping its competitive advantage and the stock should suffer in the short-term.
