TESLA: WHY IT MIGHT BE TIME FOR MUSK TO GO

What 2023 holds for the electric vehicle company

- PETER WELLS

IF SHARE price is anything to go by, Tesla is in trouble. The market capitalisation of the electric vehicle (EV) company has fallen by 73% from its record high in November 2021, causing concern for investors.

On the face of it, there is no crisis. The cars are still the benchmark for performance. The underlying technology and the sophistication of the software remain pre-eminent. The supercharging network of fast EV charging stations is the envy of competitors. Its cutting-edge assembly plant and gigafactories (for large-scale production of EV batteries) supports peak productivity.

Tesla’s direct-to-customer sales model has also allowed for rapid market penetration, and was resilient under pandemic conditions. It continues to provide huge savings in fixed costs. The Model 3— which is assembled in China, where costs are low, and has been presented as the brand’s first high-volume EV—has been successful. Tesla’s new factory in Germany, which makes its Model Y, was producing 3 000 cars per week by the end of 2022.

And after first reporting a profit in 2020—following years of losses in a dash for growth—in the 12 months to September 2022, Tesla profits reached US$11.19 billion (R192.3 billion). This was more than double the previous 12 months.

So why the concern? Tesla’s position as market leader is being threatened by growing competition in EV production, just as rumours have started to swirl that investors might be concerned about Musk’s ability to successfully lead both the car company and Twitter.