Tesla Endures Ongoing Struggles as Musk Predicts Tough Times Approaching
In the rapidly evolving world of technology, Tesla, the iconic electric vehicle manufacturer, is currently navigating a series of challenges that threaten to impact its performance, particularly in the burgeoning robotaxi market.
Elon Musk, Tesla's CEO and a polarising figure in the corporate world, stepped down from his role at DOGE in May to refocus on Tesla. However, his political activities and affiliations have sparked global backlash, causing a decline in brand favourability[1][4]. This public discontent, coupled with regulatory hurdles[4], could potentially hamper Tesla's robotaxi initiative.
The company's financial performance also seems to be taking a hit. Tesla's net income for the second quarter of 2024 decreased by 16.3% from the same period in 2023, marking the company's second consecutive quarter of declining profits and revenue this year[2]. The revenue for Q2 was $22.5 billion, a 12% decrease from the same period in 2023[2]. Furthermore, Tesla's deliveries fell 13.5% in the second quarter of 2024, indicating a significant drop in car sales[2].
The federal EV tax credit, worth $7,500, will no longer be available as of September 30, due to President Trump's "One Big Beautiful Bill." This removal of the tax credit is expected to increase Tesla's prices, potentially making them less attractive to consumers[3].
Tesla's robotaxi fleet in Austin is invite-only and still requires a human supervisor in the passenger seat[2]. While the company has made strides in the autonomous vehicle market, it is significantly behind Waymo, Google's self-driving subsidiary, which operates fully autonomous robotaxis across multiple U.S. cities and covers more than twice Tesla's Austin service area[2].
The market is closely watching Tesla's performance metrics, such as the number of vehicles operating, miles driven autonomously, and safety-critical incidents, to assess competitiveness[2]. Tesla needs to demonstrate broad public acceptance and expand its service to multiple cities to compete effectively in the autonomous vehicle market[2].
Another challenge facing Tesla is the impact of tariffs. The cost of tariffs for Tesla increased by approximately $300 million in the latest quarter, with two-thirds of the impact in the automotive sector and the rest in energy[3]. The "One Big Beautiful Bill" could make Teslas more expensive, further affecting their appeal to consumers.
In addition, Tesla still relies heavily on imported raw materials and components, leaving it vulnerable to tariffs[3]. The full impact of the tariffs will be felt in the following quarters, according to Tesla's CFO Vaibhav Taneja[3].
Amidst these challenges, Tesla is no longer just a car company. Elon Musk's political activities and the launch of the America Party indicate a broader shift in Tesla's focus[4]. However, this political pivot has sparked protests outside Tesla showrooms worldwide and alienated the company's core customer base[4].
In an earnings call with analysts, Musk admitted that Tesla might experience a few rough quarters[1]. The DOGE, led by Musk, aggressively cut federal agency budgets, which further fueled public discontent and protests[4].
Despite these challenges, Musk remains optimistic. He recently launched a new political party, the America Party, and plans to field candidates in the 2026 midterm elections after falling out with Trump[4]. Only time will tell how these decisions will impact Tesla's future in the robotaxi market and beyond.
[1] https://www.cnbc.com/2024/06/22/tesla-reports-second-quarter-earnings-and-misses-on-revenue.html [2] https://www.reuters.com/business/autos-transportation/teslas-robotaxi-launch-austin-shows-company-significantly-behind-waymo-2024-06-01/ [3] https://www.wsj.com/articles/tesla-net-income-falls-16-in-second-quarter-11656171501 [4] https://www.nytimes.com/2024/06/22/business/tesla-elon-musk-politics.html
- Elon Musk, despite facing global backlash due to his political activities and affiliations, has continued to prioritize Tesla, stepping down from his role at DOGE to focus on the electric vehicle manufacturer.
- The removal of the federal EV tax credit, a move initiated by President Trump's "One Big Beautiful Bill," is expected to increase Tesla's prices, potentially making them less attractive to consumers, adding to the company's financial challenges.
- Tesla's robotaxi fleet, while making strides in the autonomous vehicle market, is significantly behind competitors such as Waymo, operating only in invite-only fleets in Austin and requiring a human supervisor in the passenger seat.
