6 Reasons Why Tesla is Failing, and they all have to do with Design
Tesla deliveries plummeted in the first quarter of 2024, even after the launch of its [long-awaited Cybertruck finger guillotine]. Year-over-year sales dropped 8.5%—the first decrease since 2020. It’s an “[unmitigated disaster]” for Tesla, analysts point out, even in a [slower-than-anticipated EV market]. For reference, other brands’ sales [have increased] in Q1: 62% for Hyundai, 88% for Kia, 65% for Toyota, and 62.6% BMW. There’s been a total 15% YoY boost for the EV industry’s Q1 2024, even counting Tesla’s plunge.
But it’s not a surprising dive. It is just the first clear warning sign of what [we said last year]: Bad design has turned Elon Musk’s success into a mess.
Here’s a list of most everything that Tesla needs to fix if it wants to hold onto its rapidly slipping crown.
Note to Boy Wonder: Put down the Twitter machine and get back to the mother ship.
But one cannot rest on past laurels.
Many new models are coming out.
I believe Tesla faces the greatest level of competition in the EV market in its history.
Charlie Munger turned down investing in Tesla in 2009.
Charlie who was 86 at that time didn’t envision how EVs could succeed. It would require big bucks and big risks. Charlie wasn’t interested in that.
But he did have an opinion about Elon Musk. In 2021, at the Sohn Hearts & Minds Investment Leaders Conference, he reportedly remarked, that Musk “thinks he’s even more able than he is,” a trait he believed contributed to Musk’s success.
All those brands and models that are competing with Tesla are also competing against each other. As long as the goal is to beat Tesla, Tesla is in the lead.
Right! Cybertruck, Model 2 or Redmond, RoboTaxi, and Semi are all future laurels. Of note, Tesla has several sources of cash flow that competitors don’t have such as SuperChargers. Money is king. Focusing only on models misses the bigger picture, cash flow. Take a look at the profit per car each model generates. I believe Tesla is the one with the highest margins.
At the end of the day cars are mostly commodities and the low cost producer is the winner. But the car market does have layers, exotic, luxury, large trucks, sedans, mid size, compact, minis. These layers don’t compete (much) with each other. This needs to be considered when pitting models against each other.
My outlook is that in five to ten years auto hardware will no longer be the biggest source of revenue for Tesla, much less source of profit. A recent Nvidia humanoid robot show highlighted seven or nine of them, none Tesla. Great business for Nvidia to train robots as a service (TRaaS) but none of the robot makers have either the data or the compute power to match Tesla. Another Tesla vertical integration advantage. Same goes for sales, Tesla can use Optimus in house, competitors have to find partners like Amazon. It all adds up. You can find spots here and there where competition beats Tesla but the big picture is a different story. At this early stage vertical integration is a great asset.
Yeah, I think we all know the history. There are lots of companies which broke through, and then for one reason or another ended up on the trash pile for their breakthrough product. Maybe they failed to innovate, or perhaps picked the wrong business model, or got outdone by a more nimble competitor or whatever. The list is long, and the article merely points out that Tesla’s models are getting long-in-the-tooth and that they have serious gaps in their product line (SUVs, Minivans, etc.) and perhaps made some mistakes spending so much time on a goofy product like the pick-up, to the detriment of other choices they could have made.
Here are a few companies which led the way, and which have either folded entirely or are a mere shadow in the line where they once were dominant:
IBM Personal Computers
Apple ][
Yahoo!
Nokia
Blockbuster
Blackberry
MySpace
Motorola
Palm
Sony Walkman
Circuit City
Netscape
Atari
AOL
TiVo
And lots more.
Much is made about “first mover advantage”, but often times it works the other way. The first mover gets a short flight of glory, but has to spend more R&D than the 2nd, 3rd, and 4th into the field, who can simply jump on the bandwagon and if they have other advantages (pre-existing factories, dealer groups, whatever) may surpass the early leader in just a few years.
Please read the post again. I was clearly responding about X/Twitter.
Although, putting down X may provide much needed practice for Elon. Apparently, for some reason, selling a lot of cars isn’t helping Tesla stock price.
I don’t see how the RobTaxi is a success until the FSD is perfected. The postponement of the Model 2 is strange. I and the public simply have no information on what is going on in regard to the model 2. I have had read stories that Tesla is cancelling model 2 due to the intense competition of low cost Chinese model. But I don’t think the reporters know. They are just speculating.
The Cypertruck has had a great launch. Elon has won a laurel there. Tesla is having difficulty supplying enough of them to consumers. And it held it own in comparison testing against the Chevy Silverado, Ford Lightening, and Rivian trucks. All producers are similarly priced at the base model level. Ford & Rivian have their production line up and running as they had 2023 models. Chevy & Tesla have just got going. Though I read last month that Tesla has ramped up production. And that the Austin factory will have the capability to make 250,000 Cypertrucks by 2025. Manufacturers are announcing price cuts on their EV pickups. It will be interesting to compare 2024 year end sales of the respective brands. Tesla does have the production cost edge. Ford lost money on its 2023 EV pickups. Can Ford turn that around? Rivian isn’t profitable. They only cranked out 15000ish EVs. That has to improve if they are to survive. It remains to be seen if Chevrolet can make a profit on its EV pickups truck.
Maybe, at least that’s what some people are starting to say. Of course it’s easy to pile on when things stop being wonderful at every turn. Looks like it’s Tesla’s turn in the barrel, as we used to say:
There is no reason for the two to march in lockstep.
Sears
The Great Atlantic and Pacific Tea Company (A&P)
Kodak
JCPenney
WeWork
Hertz
Lordstown Motors
Rite Aid
Enron
Arthur Andersen
Bed Bath & Beyond
Tuesday Morning
Blockbuster
SmileDirectClub
Brooks Brothers
Stein Mart
GM
Chrysler
Studebaker
Kaiser-Frazer
Nash Motors
Packard Motor Car Company
Hudson Motor Car Co.
American Motors
Stanley Steamer
Pony Express
Hi Goofy - until recently, thousands of eager buyers were tripping over one another to grab a Tesla, and now that sales growth has slowed, it’s due to ‘bad design’?
Seriously?
Many of the reasons given in the article for ‘Why Tesla is failing’ arguably contributed to Tesla’s market beating performance till recently
Stale model line / Bland design: When you’re racing to grab as much market share as you can before competition wakes up, you want minimum complexity and maximum uniformity in the designs you want to churn out in the millions.
Tesla’s breakthrough appeal was in its state of the art technology and unprecedented ecological ‘cool’ factor. And of course Musk’s charisma and talent for hype made it even more of a FOMO object.
I doubt its aesthetics were a key factor in the initial buying euphoria
Now that the early adopters have mostly piled in and growth is slowing, yes Tesla should look at adding more choice to prepare for the inevitable splintering of buyers’ tastes as the market gets past its early teens
No dealerships: A very bold move, totally justified for overcoming the guaranteed resistance of ICE dealers to any threat to their legacy business.
Why waste money and effort cajoling, retraining and incentivising people who want you to fail?
In this day and age, direct-to-consumer is a very powerful marketing tool if you can wield it smartly
Yes I think Musk’s FSD is a con job (as is that of most others promising similar auto alchemy), but that doesn’t mean Tesla deserves to be rated “Fail” in this early innings of what promises to be a pretty long game.
It is now. That and a lot of other things, as detailed in the article(s). Now I don’t disagree with nearly all of what you said, but I am reminded of Henry Ford, who was arrogant enough to think that the Model T was perfect and never needed to be refreshed. Or offered in a different color. Indeed, Edsel did a skunkworks to produce an upgraded model and Henry tore it apart with his bare hands.
It’s clear to me that the EV market is moving and Tesla has not adapted. (I acknowledge that it’s possible they don’t need to, but I don’t think that’s true.) For instance: I see Tesla’s everywhere, and frankly they look, uh, tired. The smaller ones look like older Toyotas (maybe it’s just me.) Consumers have shown a preference for at least some physical controls but Tesla has not moved from the one big screen concept. It was new, trendy, even futuristic at first, now it’s a negative, at least for some.
Tons of competition has come on line. While Tesla’s sales sank, many of the others have grabbed customers. BMW, Cadillac, Ford, Hyundai, Kia, Lexus, Mercedes, Rivian, and a few lesser names. In fact even with Tesla’s big stumble EV sales were up for the quarter, so clearly consumers were waiting for “something else.” Tesla put huge effort into FrankenTruck, and it’s selling well, but I suspect there’s a quite limited base for it. (Yes, that’s my speculation, so I’ll drop it.)
The “no dealer” model was cool for a while, and might have been the only way to get it off the ground, but I suspect it will hurt them long term. Maybe not, but as much as people like to P!ss and Moan about car dealers, they still like the surety of having a place to take a car that needs something - even if they don’t use it. (I don’t think the video would be to have traditional dealers sell them anyway. But Acura, Infiniti, Lexus, Hummer and others have found new dealers to invest and put up free-standing dealerships. Maybe a terrible idea, maybe not, dunno. But these are the kinds of issues that Musk I& lieutenants) should have been dealing with all along. (And of course maybe they were and just chose wrong.) But a model that hasn’t been refreshed in 10 years? Really? Another that’s 8 years old?
Agreed. But that moment sitting on a steed in shining armor, perched at the top of the hill, triumphant against the rest of the industry? That’s gone. They have work ahead. They’ve done astonishing things, but nothing lasts forever.
I can’t argue against most of your positions…
I’m guessing the 10 year old model you are talking about is the Model S? IT is actually 12 years old.
I haven’t carefully followed all the variations and updates to the Model S, but according to Wikipedia:
Model S
The Model S is a full-size luxury car with a liftback body style and a dual motor, all-wheel drive layout. Development of the Model S began prior to 2007 and deliveries started in June 2012. The Model S has seen two major design refreshes, first in April 2016 which introduced a new front-end design and again in June 2021 which revised the interior. The Model S was the top-selling plug-in electric car worldwide in 2015 and 2016. More than 250,000 vehicles have been sold as of December 2018 (when Tesla merged production numbers for the Model S and Model X).
In 2019 they did a refresh that included the HW 3.0 computer (required for FSD)
In 2021 they launched the Model S plaid version.
They also have changed the battery capacities and max charging rates (as new Supercharging rates have shipped) a few times…the 2012 models got barely over 200 miles and now it is over 400 miles.
This discussion seems to omit the considerations like shipping delays due to the Suez issues and the German plant being off line due to the sabotage. I have seen suggestions that this quarter may start with a burst of sales as the delayed shipments reach their destination.
I think it was albaby1 who pointed out that even if the Suez issues and the week long shut down at the German plant amounts to 20,000 vehicles - that would still mean Tesla came in flat - while the market was expecting the continued hyper growth it was used to in previous quarters.
In fact by Tesla’s report for Q1 they actually produced more - but delivered fewer, so the German plant issue should have impacted production, not sales. And the Suez was for parts, IIRC.
They just dropped pricing again, which I take as an indication that they are resorting to the age old industry tactics of moving the metal. I think it’s no longer “as many as we can produce”, they’ve hit the era of “how many can we sell?” Heck, they cut prices in January and still didn’t make the number.
Top comment by [FC] The only new model in Tesla’s lineup doesn’t have sufficient demand to run all the shifts? That’s very troubling but not surprising. I guess the decision to launch an $80,000-120,000 niche truck that’s worst in class in every regard except acceleration wasn’t the best plan. Maybe instead they should’ve been focusing on drastically improving the core lineup and adding additional models that would be easier to produce and potentially sell in the hundreds of thousands to a million units per annum. If the decision to can the $25,000 car in exchange for a “robotaxi” is even the least bit true the future of Tesla looks bleak. Robotaxis are years and years away not only due to their technical challenges that are so far from being solved but also due to government approvals and the market’s acceptance of such a product.
Maybe Elon will also learn that the anti-vax anti-Semitic conspiracy theorists he’s trying to be buddy-buddy with on Twitter aren’t exactly the EV buying type either. All he’s doing is turning off the people that actually have and would buy a Tesla. Elon needs to go. It would be best if he left on his own but that’s extremely unlikely to happen. The board is full of Elon apologists but maybe if they see their portfolio crashing that will motivate them to make a move they otherwise wouldn’t have done on a moral or ethical basis.
Not surprising as the Ford Lightening is dead last compared to other pickup EVs.
The Rivian entry appears to be superior to Cybertruck.
the Cybertruck did lose to the Silverado in Range but was close with a much smaller battery pack.
304 miles vs 329 miles. 123kWh battery pack to 193kWh battery pack.
There have been some complaints that the Cybertruck has limited visibility.
