Wall Street analysts expected Tesla to report weak numbers, but the company’s reported numbers Tuesday, after the close of the bell, were far worse than anyone envisioned.
Don’t expect Tesla CEO Elon Musk to take the obvious blame.
Analysts were expecting deliveries of 457,000 vehicles in the first three months of 2024. Tesla came in significantly lower, at 386,810—a 15% miss. In the year-ago quarter, Tesla delivered 412,376 cars, and in the last three months of 2023, Tesla delivered 484,507 cars. No matter how you slice it, it was a disaster for Tesla and Musk, and the stock has been hammered accordingly. Having shed around a third of its price, Tesla is the second-worst-performing stock in the S&P 500 Index this year.
Tesla had plenty of reasons for the underperformance. “Decline in volumes was partially due to the early phase of the production ramp of the updated Model 3 at our Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin,” the company said in a statement. At its earnings call, Tesla further added to the gloom by announcing that sales growth would be “notably lower” the rest of this year despite aggressive price cuts.
Launched to much mockery, Tesla’s Mad-Max-looking Cyber Truck is off to a slow start, despite the massive popularity of the pickup truck form factor among consumers. In fact, the top two most popular vehicles in the U.S. are the Ford F-Series and the Chevy Silverado, and another three pickup trucks round out the top 10. Tesla has two entries in the top 10: the Model Y at number 4, and the Model 3 at 10. These new sales will likely change that. Given that the form factor owns half the top 10, Tesla’s ridiculous Cybertruck looks like a catastrophic dud.
Other news outlets blamed the expanding electric vehicle market for some of Tesla’s woes, and that undoubtedly plays a part. But Tesla’s first-mover advantage hasn’t been dulled as its technology and far-superior charging network makes it the best electric car on the market. In a neutral world, with an invisible CEO, Tesla would still be growing.
But it’s not a neutral world, and Musk is anything but invisible. Indeed, he has saddled Tesla with baggage that goes from the political to the practical.
Did you know that Tesla got rid of driving stalks? You know, the stalks that make it easy to turn on lights, control windshield wipers, activate turn signals, and select which direction the car will drive. Those controls now live either on the steering wheel itself, or on the touch screen. Take a look:
Imagine trying to use turn signals when you can’t mindlessly flick a stalk up or down, depending on the direction you’re turning. You literally have to look down at the steering controls to find the button. Same with all of those controls. Heck, even the horn wasn’t in the center, where every single automaker—including Tesla—for a century has placed it.
And note that it’s not a steering wheel, because for about a year, Musk refused to give buyers of its higher-end, higher-margin vehicles a simple freakin’ steering wheel. He was enamored by this yoke, which resembles what car racers use. But professional car racers are a surprisingly small demographic, and it wasn’t until much wailing from Tesla’s biggest fans that the company begrudgingly brought back the steering wheel as an option.
The biggest sin, however, is requiring the touchscreen to put the car in drive, reverse, park, and neutral. I’m a Tesla owner, and I frequent Tesla forums online, and the company’s rabid fans hate these changes! Musk thinks he’s so smart and brilliant and edgy, and as a result has made the car difficult to drive, breaking norms and conventions used by drivers their entire lives. None of this has made Tesla a more desirable purchase. Quite the opposite!
So even before we get to Musk’s politics, his cars are already an increasingly difficult sell. I have an original Model X from 2016, and it is, in every way, still a better car than these modern atrocities. Even if Musk was a philanthropic benevolent humanitarian, and if I had the disposable income, I would still not upgrade my car. And that is a common sentiment on Tesla forums—the company’s customers aren’t feeling the desire to upgrade their older vehicles, even the ones who can afford to, or are happy to consider market alternatives—you know, cars with basic features like turn stalks.
But then there is, of course, politics.
We at Daily Kos are well-apprised of Musk’s mad descent into MAGA Q-adjacent land, as well as his seemingly inevitable embrace of Donald Trump and his toxic brand of destructive politics. But Wall Street analysts are also paying attention.
“Anyway you put it, it was ugly,” said influential analyst Gene Munster. “Is Elon’s brand damaging Tesla sales in the U.S.? It’s directionally a negative.” It’s difficult to see Musk as CEO of Tesla when he spends the day cavorting with Nazis on the platform formerly known as Twitter. A Reuters headline declared: “Would-be Tesla buyers snub company as Musk’s reputation dips.”
“It’s very likely that Musk himself is contributing to the reputational downfall,” Caliber CEO Shahar Silbershatz told Reuters, saying his company’s survey shows 83% of Americans connect Musk with Tesla.Reuters spoke to five marketing, polling and car experts who said controversies surrounding Musk’s increasingly right-wing politics and public statements are weighing on Tesla’s brand and demand.“It is hard enough to win sales without getting into politics,” said Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management.
Tesla registrations in California fell for the first time in years, as Musk’s repeated attacks on the state and its liberal car buyers have taken a toll. Clearly, Musk’s love affair with Texas—a state that doesn’t even allow Tesla to sell directly to buyers because of dealer protectionism—doesn’t seem to be paying off in commensurate sales growth. Teslas made in Texas have to be shipped out of the state and then reimported across state lines to any buyers in Texas who purchase them online, one of many ridiculous workarounds born of dealer-protection laws,” wrote Alexander Sammon in Slate.
Yet you don’t see Musk tweeting endlessly about the lack of a free market in Texas, or his Republican buddies who enable that racket. He’d rather attack the people actually buying his cars. Now, those are the people who used to buy his cars. For whatever reason, his new edgelord incel buddies aren’t keen to pick up the sales slack.
It’s inevitable: To continue growing and thriving, Tesla will have to ditch Musk. He is toxic, destructive, and distracted. His decisions—like the steering yoke, lack of stalks, and even the Cybertruck—have proven disastrous to the company. And his reputation and bizarre focus on Twitter/X compounds his damage to Tesla.
Musk thinks he is unaccountable to anyone, but Wall Street and car buyers are all clearly telling him otherwise. He won’t care. The only question is whether Tesla’s board and its shareholders do.