Tesla Crisis: Musk Facing Accusations of No Stock to Sell and Looming Market Challenges

Tesla’s time limit is up: friends accuse Musk of having no stock to sell (Jordan Strauss/Invision/AP)

faceTeslaHow should the company’s leaders respond to this month’s lower-than-expected volume of deliveries, large layoffs, reports of abandoning production of low-priced entry-level models, and a sharp drop in prices stock? They only emphasized that shareholders should ensure that CEO Musk receives a large salary.

Tesla’s board of directors made clear in a proxy statement filed Wednesday that Musk will remain in place even as calls from investors and analysts for Tesla to change its leadership. But the problems facing Tesla are not only Musk’s management abilities and board responsibilities, but whether he can develop the mass market and the future of autonomous driving as well. caused the stock price to rise.

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“With or without Musk, Tesla’s stock price will go down,” said David Trainer, CEO of investment research firm New Constructs. distracting investors avoid the weaknesses in Tesla’s business, now is the time for the full truth to be revealed.” New Constructs is an investment research firm that does not own Tesla stock.

A decision to lay off employees often causes a stock price rebound because it can indicate greater cost efficiencies or new strategic directions. But Tesla’s layoffs had the opposite effect, showing that something was wrong with the company and causing the market to lower its expectations for the company.

Tesla and its valuation were already under increased scrutiny even before the latest round of problems.

Even putting Musk’s personal issues aside, Tesla, as a successful pioneer of electric vehicles that moved the entire automotive industry towards his vision, is now losing its original advantage.

Tesla has a huge lead in market share and company value. As of Thursday, its market capitalization was just under $500 billion.

But competition is everywhere. While the rise of Tesla has shaken the state of Detroit, traditional car manufacturers are gradually innovating.

“His first-mover advantage has long been eroded,” Trainer said. “In high-end and low-end markets, competitors have caught up and surpassed Tesla. “

Even Tesla’s most loyal supporters are skeptical.

Wedbush analyst Dan Ives said: “We believe the deadline has arrived, and Musk now needs to put together a growth strategy, provide realistic delivery and profit targets, talk about why layoffs are now on a large scale, and more importantly, to provide feedback from the market. . Bright prospects for Model 2.”

Tesla’s long-awaited entry-level car, sometimes called the Model 2, is an important step towards its ambitious vision of bringing electric vehicles to the masses. bring about.

However, Reuters first reported the news that the plan to sell electric cars priced under $30,000 had been scrapped, and said Tesla would focus on self-driving taxis, Robotaxi. Musk said that “Reuters is lying” but then Tesla said that Tesla will launch Robotaxi on August 8.

Analysts said the recent reorganization, which even ousted longtime chief executive Drew Baglino, showed the company was facing a riskier gamble.

Instead of mass-producing affordable consumer-grade electric vehicles, the updated blueprint relies on building a fleet of self-driving cars and removing barriers technical and management of fully autonomous vehicles. Those who are optimistic about Tesla believe that this has always been the part that attracts the market, and they believe that the company’s big data resources are the main tool of commerce in the next century of to drive

But even taking Tesla’s driverless ambitions a step further won’t be enough to calm the concerns of longtime supporters. “If there’s no affordable version to sell, an analyst can’t find a financial model that works for Tesla.” Ross Gerber, president of Gerber Kawasaki Wealth Investment Management, said on X: “Tesla needs a model launched at a low price.”