Crossed Wires — Musk,Tesla and the first whiff of ruin

Daily Maverick

28-04-2025

If it does not become competitive in price, range, charging time, design and features, then Tesla may well become an also-ran, to be sold, asset-stripped or, yes, sent to the same resting place to cuddle with the DMC DeLorean
There are two narratives bouncing around the airwaves. The first is that almost everyone who is interested in environmentally friendly cars now dislikes Musk (because of DOGE, DEI and other antics), so they won't be buying Teslas – or won't be buying them again. The second is that Teslas are no longer exceptional cars (in fact, they are positively dowdy next to more recent competitors like BYD from China and VW in Europe), so they are no longer the EV of choice.
Ergo, Tesla is on its way to bankruptcy. Or so it is claimed. A mere four months ago, when Tesla was the most valuable car company on earth with a valuation of $1.6-trillion, bankruptcy and Tesla wouldn't have been caught dead in the same sentence. But here we are.
So, can the unimaginable happen? Yes. Well, maybe, maybe not, and definitely not soon. There are still too many variables in the frame.
Let's look at some of the ingredients that went into this mess.
I'll start with the numbers. Tesla's Q1 report, which came out last week, is a horror by any standards. Net income down 71% compared to last year, revenues down 25% from last quarter, market value now down more than 40% from 31 December 2024. But that is not the worst of it. Even the reduced net income of $444-million for this quarter requires clarification. Tesla sold $595-million of carbon credits during the period. In other words, they lost money in their auto business.
These figures are so terrible that any financially literate reader will say WTF. So bad that, in a normal world, the CEO would immediately be fired. (There is no chance of this happening with the current Tesla board and the power of Musk's shareholding.) So bad that the Tesla story will probably end up at Harvard as one of their famed case studies of business catastrophes.
Could this be a once-off stumble, to be laughed at over dinner by shareholders a year from now? No, it's unlikely, not with these harbingers:
In the US, Tesla's EV market share dropped from 51% to 42% in a year, as rivals such as Chevrolet, Ford and Porsche gained ground. In Europe, it was even worse, with VW taking the lead and surging 157%.
Then there is the price. In China, the comparable BYD is 15% cheaper. In the EU, the comparable VW is 35% cheaper.
Oh, and the resale value of the Tesla has totally collapsed. It is about 50% lower than in 2022.
Ouch. Ouch. Ouch.
What about Tesla's other profitable business – its energy division (i.e. batteries)? It is still profitable, but China's CATL shocked everyone last week when it announced its new sodium-ion battery, which will facilitate a total range as high as 800km, and has a 5–80% charge time of just 15 minutes, which is twice as fast as the industry's current best charging level. The battery will be in mass production later this year. Tesla currently has no response to this – it does not produce a sodium-ion battery.
Ouch again.
But there's a bright spot
There is one bright spot. Tesla sits on a huge pile of cash and short-term investments ($36-billion as of this financial report), a buffer large enough to staunch any immediate or even medium-term solvency problems. And Musk is promising a new lower-priced Model 2 by September, one that will compete head-on with BYD. Except that we have heard these promises before – remember robotaxis, Cybertruck, the Roadster, autonomous-driving (and even the now much-delayed Model 2) – so industry skepticism is running high.
With regard to the Cybertruck, the less said the better. It's a dud – this century's Edsel. And as for Musk's great hope, the robotaxi, there is a bigger story to tell here (which involves some of Musk's sensor technology choices), but suffice to say that competitor Waymo is way ahead. This could change – a deal could be made with Waymo, which makes self-driving technologies not cars, but that would be an embarrassing surrender for Musk, and he does not like losing.
The bottom line (excuse the pun) seems to be simple. If Tesla does not launch a mass consumer-priced competitor to VW, BYD and others (like Toyota and Ford) this year, then there seems no way to reverse this vertiginous downward spiral. If it is not competitive in price, range, charging time, design and features, then Tesla may well become an also-ran, to be sold, asset-stripped or, yes, sent to the same resting place to cuddle with the DMC DeLorean (the short-lived, gull-winged car of Back to the Future fame).
And then, just as this article was going to press, there was another blow for the company. A Jeff Bezos-backed company called Slate just released an EV – a hybrid truck/SUV with a sticker price of $20,000. Dare I say it? Another ouch.
Which brings us back to Musk. Has his extended absence, during which time he's been trying to remake America with Trump, been the cause of all of this? Will he return to steady the ship? Will he re-ignite a tsunami of innovations as in the good old days?
Consider that all the decisions that brought Tesla to this precipice were made in 2022, 2023 and 2024 – auto manufacturing is a slow-moving business. He had his eye on the Tesla ball back then so we have to assume that he is to blame for decisions made back then. It is difficult to blame someone else when Musk's inability to delegate is legendary.
Finally, can Musk entice his core buyers – those liberal-leaning environmental empaths – back to Tesla? No, he has cooked that goose. The video of him standing on stage with the chainsaw has put paid to that forever. Can he entice right-wing America to buy his cars? Nope – few of those buyers give a damn about EVs. They like fossil fuels – none of these namby-pamby, tree-hugging automobiles for them.
A quote from Musk this week makes it clear where his head is at. In an earnings call with CNN (defending his work for Trump), he said: 'If the ship of America goes down, Tesla will go with it.'
If I were a Tesla shareholder or a Tesla board member, that would mean one thing to me: Musk's priority is not Tesla. Tesla has lost its way and is not coming back. DM