Shulou(Shulou.com)11/24 Report--

Beijing, January 8 (Xinhua) although Elon Musk's "making waves" on Twitter has affected Tesla, Tesla himself is also undergoing a profound change: from insufficient production capacity to insufficient demand, has the golden growth era of this electric car pioneer come to an end?

Tesla is in the doldrums. Paul English (Paul English) is a big fan of Tesla, who helped Musk become the richest man in the world in a short period of time. He is a Boston tech entrepreneur and co-founder of travel site Kayak. He bought his first Tesla in 2013, continued to invest in the company three years later, and is now driving the latest Model 3.

Mr Musk's "miscalculation" but after witnessing Mr Musk's behaviour since buying Twitter at the end of last year, including his cruelty to employees when he set out to cut the company's staff by about half, Mr English said he was not sure whether he would buy another Tesla.

According to English, Musk "made a serious miscalculation". "most of Tesla's buyers are people who like change and new things. they are typical educated people, liberals. Guess what educated liberals don't like? bullying." He said.

Musk's acquisition of Twitter is not popular on Wall Street. Wall Street fears that the chaos and political divisions caused by the deal will damage Tesla's brand and distract him at critical moments. Tesla's share price began to fall in the autumn and later turned into a crash. Tesla's share price is 73 per cent below its peak more than a year ago. Musk's own wealth also evaporated 200 billion dollars.

Profound changes while Musk's Twitter farce dominated the headlines, Tesla's prospects are also undergoing profound changes.

Tesla experienced a very successful period when the company's market capitalization peaked at nearly $1.3 trillion and after-tax profit is expected to reach nearly $13 billion in 2022. But this period of success was quickly replaced by a bleaker economic outlook. The main concern of Tesla investors has shifted from how the company produces enough cars to meet demand to where the company can find enough customers to justify its surging production.

Tesla's share price has fallen more than 70 per cent from its peak in 2022, and Tesla's new car delivery growth has slowed to 40 per cent from 87 per cent the year before. This is still an extremely fast growth rate for a large carmaker, but below Musk's own annual growth benchmark. Musk has said that in the foreseeable future, the company's annual car delivery growth rate will reach 50%.

Philippe Houchois, global automotive analyst at Jeffery in London, the investment bank, said Tesla now faces a new problem of finding more customers as its large new factories in Texas and Germany rapidly increase production. This left Tesla facing a "perfect storm": increased supply, falling demand and increased competition, all of which could put the global auto industry on the brink of a deep recession, he added.

This makes Wall Street eagerly look for clues about Tesla's future at a time when it could be an important turning point. Is this the end of Tesla's golden growth era? Has Musk's days come to an end as a respected innovator and advocate of a sustainable energy future?

Or, as Tesla fans say, will the economic downturn really boost Tesla's leading position in electric cars and bring Musk one step closer to his goal of dominating a new car industry based on electric vehicles?

The situation is grim although Mr Musk's distraction on Twitter has intensified Wall Street's reflection on Tesla, but there is little evidence that it had a direct impact on car sales.

Fiona Fiona Howarth, CEO of Octopus EV, a professional electric leasing company, said there were "far more than 1000" buyers of Tesla from Octopus last year, of which only two customers turned to other brands because of Twitter problems.

However, she added that this was still noteworthy given Tesla's high brand loyalty. A survey by Morning Consult, a US consultancy, found that the proportion of US adults who had a positive view of Tesla fell by 6 percentage points between October and November last year. Among Democrats who are more likely to become consumers of electric cars, that proportion has fallen by 20 percentage points.

Musk also, Musk can be said to have tarnished his company's brand in one of the worst moments. Higher inflation and rising interest rates have made the situation worse for many potential customers and increased the cost of financing new cars. Prior to that, Tesla pushed a series of price increases during the COVID-19 pandemic, as rising material costs and ample demand provided opportunities to improve profit margins.

Higher selling prices and financing costs have raised the average monthly car installment payment by Americans by about 1/4 to nearly $700 in the past two years, according to Adam Jonas, an analyst at Morgan Stanley. In a report to investors last month, Mr Jonas warned that this would weaken demand for electric vehicles as a whole and expose Tesla to a "deteriorating macroeconomic background, record unaffordability and increasingly fierce competition".

Its impact is already clear. In the US and China, the waiting list of Tesla's most popular models had to wait for six months or more in early 2022, but now the waiting list has all but disappeared. According to the latest data released by Tesla, the company delivered only 405278 new cars to customers in the last three months of last year, well below the 500000 expected by some in September last year.

Survival of the fittest at the same time, 10 years after the launch of Tesla Model S, the competition in the electric vehicle market finally becomes fierce. As regulators in Europe and elsewhere prepare to abandon gasoline car sales altogether, global carmakers are increasingly introducing models that are broadly attractive, rather than early models that are limited to meet emissions targets.

Volkswagen Group has invested billions of dollars in its car brand system to support Volkswagen, Audi and Skoda models. Hyundai-Kia has launched a series of widely acclaimed models. Ford and General Motors have each pledged to spend between $30 billion and $35 billion to develop new electric vehicles, and both companies have launched a range of new models.

Many new entrants scramble for a foothold in the electric car market, which could lead to a period of competitive turmoil. "it's not easy," says Carlos Tavares, Stellantis CEO. The company this week launched an electric version of Ram 1500, joining the increasingly crowded field of electric pickups. "the industry is in Darwinian times (survival of the fittest)." He said.

Models launched by Hyundai and other companies have been well received. Tavares said that reducing the price of electric cars will be the key. "if you can't afford it, the middle class can't join the club, then we can't have enough impact to protect the planet." He said.

Tesla is facing similar pressure to reduce costs and prices in order to achieve his goal of rapid growth. In the most recent quarter, the average selling price of Tesla's car rose to $52500, nearly $5000 higher than a year ago. For Mr Musk, finding a way to bring prices down to true mass market levels could be the key to achieving his ambitious goal of selling 20 million cars a year by 2030.

"Musk has repeatedly stressed that only a small number of people in society can afford the Model 3," said one large investor in Tesla. "We need an electric car that people can afford, and Tesla is in a very favorable position in this respect."

In a conference call with Wall Street analysts last year, Mr Musk said Tesla had begun to think about how to build a new car with a lower price, although he did not say how long it might take to become a reality.

Tesla's next move out of the doldrums will help determine the ultimate trend of his share price. Despite the sharp fall in the share price, Tesla's share price is still trading at about 28 times this year's expected earnings, a huge premium to other carmakers.

Bob Lutz, a veteran auto industry executive, said the share price was likely to be revalued more severely as investors realised that Tesla did not have any particular technological advantage to justify its valuation as a high-growth technology company.

Mr Lutz, who has held senior positions at Ford, Chrysler and General Motors, praised Mr Musk for "single-handedly restoring the US auto industry's reputation for technological innovation". But he believes that because the technology behind electric motors, lithium-ion batteries and control electronics has been widely acquired by other carmakers, Tesla is destined to be seen as just one of many carmakers, whose stock market valuations are much lower than they are now.

However, Musk's supporters say this underestimates the more lasting advantage that Tesla has established in the decade since the launch of Model S.

From the design of battery cores and packaging to manufacturing technology, to casting large parts of the latest models together to reduce the number of parts, Tesla has made a lot of technological advances, which gives it a clear cost advantage, says Pierre Ferragu, an analyst at New Street Research.

Tesla factory battery pack he added that Tesla's gross profit margin is also at the industry-leading level, which provides a buffer for it to reduce prices to maintain growth. He believes that other carmakers with lower profit margins on electric vehicles will have to cut back on capital investment, thereby reducing competition.

If the above judgment is correct, it means that Tesla may come out of the downturn in a better position than his competitors and prepare for the next stage of growth. But for now, Wall Street is alarmed by fears that Tesla is facing slower growth and will be forced to cut profits to support sales.

For Tesla's followers, now is the best time to double their bets. Galileo Galileo Russell, a member of Tesla's loyal army of individual investors, said that while he found the Twitter controversy "frustrating", he was planning to increase his stake in Tesla for the first time in more than three years.

Mr Musk has been undervalued before and the pessimism on Wall Street is no different now, he said. "the media like to think that Mr Musk has lost support, which will destroy Tesla. But the silent majority still supports him."

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