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Things are not running smoothly: what’s going on at Tesla?

Are the good times at Tesla already over?(Bild: APA/AFP/POOL/Patrick Pleul)

Weak sales, redundancies, Supercharger deceleration - after years of unchecked growth in all areas, things are not going well at Tesla at the moment. What's going on at the e-car wunderkind?

After the industry leader set another company record in 2023 with 1.85 million e-cars produced, vehicle output slowed down in the first quarter of this year. With 401,000 e-vehicles built, the Californians are only around 7,000 units below the result for the same period last year, but measured against the rapid growth of the previous quarters, this seems like a bitter setback. Especially as the decline in March was already 41,000 units - a drop that is not only due to the Easter vacations at the Berlin plant and the consequences of the fire attack on the power supply.

It is not only production that is falling, but also demand. Global deliveries fell by 8.5 percent in the first quarter. As a result, inventories are growing; according to estimates by the consulting agency Inovev, around 160,000 vehicles are currently waiting for customers. It is not clear to what extent the decline in sales is home-made or whether the Americans are suffering from the generally weak e-car trend in the USA and parts of Europe. Tesla itself at least seems to see a need for economic action and has announced the dismissal of around 10 percent of its workforce. This corresponds to around 14,000 employees.

Old model range
In any case, there are also internal factors. Tesla is having difficulties renewing and expanding its range of cars. The Model S is now twelve years old, the Model X only three years younger. Even the Model 3 is already seven years old - in the passenger car business, a model change is usually due after eight years at the latest. Software updates and new drive variants may slow down the ageing process, but they cannot stop it. New models with bestseller potential, such as the repeatedly postponed Model 2, are a long time coming. The quirky Cybertruck has not yet been able to make up for the missed sales volume.

The edgy "combat vehicle" polarizes the important target clientele in Europe's middle classes with its martial appearance. The same applies to CEO Elon Musk, who is currently interfering in political debates primarily with right-wing libertarian comments via his short message service X. His positions on the climate crisis, migration policy and the coronavirus pandemic are unlikely to appeal to typical e-car fans. Tesla can't really afford trouble and problems at the moment, as competition is growing worldwide. Particularly in the important Chinese market, where domestic manufacturers are gaining ever greater market shares.

Perennial problem of quality
In addition, Tesla recently irritated customers with its erratic pricing policy, which sometimes seemed like the start of a price war, but ultimately remained inscrutable. In the end, many private customers turned away in frustration for fear of buying at a bad price. Worse still, even major customers such as car rental company Hertz were put off by the incalculable residual value risk. Last but not least, the Californians cannot get a grip on their quality problems; they have been at the bottom of rankings by consumer organizations such as J.D. Power for years. The German TÜV and the ADAC automobile club have also criticized their reliability and technical design. First-time buyers, often die-hard fans, may tolerate this - but a poor quality image is a serious obstacle to conquering the mass market.

Slowed store network expansion
The rather unfavorable situation has recently been compounded by the announcement that the company intends to slow down the pace of its charging network expansion. In the USA in particular, Tesla is by far the most important charging station operator with around 58,000 Superchargers. There are likely to be various reasons for the slowdown in expansion, such as the slowdown in e-car sales in the USA, possible political changes following a victory for the e-car-sceptic Republicans and the rather low margins in the traction current business.

Has "Mr. X" lost interest?
In general, however, it also seems as if the billionaire Musk has lost some of his immediate interest in Tesla. Topics such as the Twitter successor X, space technology and robotaxis seem to be more important to him at the moment. The brand could perhaps even benefit if Musk turns his attention to other projects. After all, Tesla remains a benchmark for the industry in many respects: with the Model Y, the brand has the world's best-selling car in its range, with the NACS charging standard, it has outdone the established US manufacturers and in terms of vehicle connectivity, the Californians have left the entire West behind anyway. In addition, it has a lead in battery integration and production technology that is likely to last a few more years. And even though profits shrank for the first time last year, 15 billion dollars still flowed into the company's coffers. (SPX)