Tesla is in difficulty: its product range is aging. Sales are stagnating. Top leaders flee. The stock price is falling. The first wave of new Cybertrucks faces quality issues. The low-cost Model 2 recently promised by CEO Elon Musk appears to be dead.
Some of Tesla’s most environmentally conscious buyers are signaling their disgust at Musk’s behavior by switching to other brands, even as the price cuts continue. These bargains reduce profit margins, even though the company remains profitable and still sells more electric vehicles than other automakers.
The company’s four automobile plants have greater automobile production capacity than its customers.
The situation is so serious that Musk announced on Monday that “more than 10%” of his global workforce would be laid off. How much more Musk didn’t say. Tesla did not respond to a request for comment for this article, but Musk said in an internal email explaining the layoffs that the company should seek cost reductions and higher productivity.
If Tesla were the only electric car maker under pressure, it would send shivers down the spines of California policymakers from Gov. Gavin Newsom, who in his quest to combat climate change and air pollution has set strict mandates banning the sale of new cars. running solely on fossil fuels by 2035.
But the transition to electric vehicles has, at best, hit a rocky patch, with little visibility into future road conditions. Electric vehicle sales continue to increase, but at a much slower pace than the peaks reached in 2022 and early 2023.
Ford, General Motors and other major automakers are abandoning their electric vehicle ambitions, investing more in hybrid vehicles, reducing production and delaying the introduction of some electric vehicle models. Electric vehicle startups including Rivian, Lucid and Polestar are laying off staff as they encounter production problems or fail to meet sales targets, or both. The financial woes of Fisker, the Manhattan Beach electric vehicle startup, have become so severe, its stock price so battered, that it will be barred from the New York Stock Exchange on April 22 or, more formally, “delisted.” .
The big question is whether current conditions will prove difficult (however distressing) on the path to a cleaner transportation economy. And if so, how long will the pain last.
Currently, growth in electric vehicle sales is slowing at a time when rapid expansion is needed to meet climate goals. In the United States, sales of electric vehicles increased only 2.6% year-on-year in the first quarter of 2024, while the market share of electric vehicles compared to gasoline cars decreased, to 7.3 percent, compared to a 2023 record high of 7.6 percent, according to Kelley Blue Book.
Even EV-loving California is facing customer resistance: By 2023, EV’s market share of new car sales has exceeded 21%, far more than any other state. Although California electric vehicle sales figures for the first quarter of 2024 won’t be available until early May, the signs are worrying: During the last half of 2023, sales of new electric vehicles declined in California, the first growth negative never recorded.
“We have reached a threshold of market intolerance,” said Karl Brauer, auto industry analyst at iSeeCars.com. “The number of people who have a personal interest or tolerance for the challenges of electric vehicles, or who have the means and lifestyle to work with an electric vehicle” seems to be hitting a wall, he said. declared.
Temporary or long term? That remains to be determined, he said.
His company looked at electric vehicle penetration rates in states and cities and found that sales grew rapidly until market share reached about 8 percent, then slowed significantly or remained almost flat. California is an exception; The market share of new electric vehicles reached more than 21% in 2023. Yet in the last quarter of the year, electric vehicle sales growth turned negative, with Tesla new car sales falling by 10%.
The current problem for electric vehicle advocates: how to shift the customer profile from early adopters to traditional buyers.
According to Brauer’s research, more than 90% of electric vehicle buyers are relatively affluent owners who have installed their own chargers and own two or more vehicles – meaning that, in most cases, a gasoline car is available for long journeys.
The majority of car buyers aren’t that well-off, so the price difference between gas and electric cars — about $45,000 on average for gas, compared to about $55,000 for electric — is a major problem. (Even that $45,000 is high for millions of buyers, hence the strength of the used car market.)
Electric vehicle drivers who live in condos or apartments must largely rely on public or workplace charging stations.
Public charging infrastructure is notoriously unreliable, outside of Tesla’s charging network, a system the company could afford to build and maintain while maintaining a stratospheric stock price – a stock price that has enormously suffered over the last year, down almost 40% over the past six years. month.
Tesla is starting to open its charging network to other automakers, in part to benefit from federal subsidies.
As growth in electric vehicle sales slows, hybrid cars are taking off, benefiting companies such as Toyota and Honda.
The Tesla news is reverberating throughout the automotive world. For more than a decade, he was the electric vehicle industry. Regulators cited Tesla as proof that customers would buy electric cars if the industry made desirable vehicles instead of the glorified golf carts they produced, feeble attempts to meet government regulations. Under pressure from California and 12 other allied states, European regulators and a booming electric vehicle industry in China, automakers around the world are now investing hundreds of billions in electric vehicles.
If California and the world are to achieve their lofty climate goals, policymakers and automakers, including Tesla, still have much work to do.
California Daily Newspapers
