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How Elon Musk made his crown jewel an expensive jalopy
Mark has been driving a Tesla Tesla since 2014. Mark has been driving a Tesla since 2014.
Mark said to me, "I feel stupid driving around in my brand-new Tesla Model Y,"
Musk increased the price of Tesla's four models in 2022 due to rising supply costs and improvements to its driver-assist software. Mark thought he was getting a rare deal when he was able to get a year-end rebate that reduced the cost of his Model Y from $65,990 to $58,490. Tesla announced that the Model Y would be priced at $52,990, a $13,000 reduction just two weeks after Mark received his car.
The dramatic price cuts caused a shockwave in the Tesla-owner community. Their brand-new Teslas' value dropped as much as 20% overnight. Musk's fans who had remained loyal through "production hell", several federal investigations and instances where steering wheels fell off had reached their limits.
Mark sent a simple message to Tesla CEO: "Elon, please help me and do something!"
The past 20 years have seen Tesla defying all expectations and disrupting automotive industry. But in 2023, the once-revolutionary car company made the unthinkable happen: It turned its fans against itself. It's more than just complaints from overly attached fans. This is a sign that a company which has built a reputation for being a futuristic automaker for so many years may be losing its edge.
Tesla is no longer a young, scrappy industry disruptor. It's becoming a company that looks more like the automakers it once rattled. The company's former leader, who appeared in the "Iron Man", movies and promised to take mankind to Mars, is becoming more human every day.
Tesla was the only company that has ever existed in an environment of economic prosperity and real competition. Musk will soon discover how difficult it is to compete with the most well-known brands in the electric vehicle market.
Losing your edge
Since its inception in 2003, Tesla has been a leader in technology. Tesla has been at forefront of the EV revolution since its launch in 2003. They have delivered the first battery that can rival a gasoline-powered car and established the Supercharger network, the largest charging infrastructure. Tesla was also a pioneer in innovations such as over-the-air software upgrades, large touchscreens on cars and keyless vehicle entry. After years of leapfrogging ahead of the tech of legacy car companies, Tesla's futuristic vehicles are now stale.
The average electric car manufactured by automakers such as GM, Ford, or Hyundai has a range that rivals Tesla. New vehicles now come standard with an iPad-like touchscreen. Other car companies are also catching up with software and directing billions to new Tesla-fighting features such as hands-free driving or batteries designed for performance. Perhaps the most obvious example of Tesla's mediocre innovation is its role in the field of self-driving tech.
Musk has long promised that Teslas would be completely driverless. He stated last year that Tesla's electric-car company would not be worth "practically zero" if self-driving technology wasn't a priority. Tesla quickly developed a Level 2 hands free driving system. In this system, the driver does not need to touch the steering wheel and must remain alert to the road. However, Ford and GM have also introduced hands-free driving systems and aren't being investigated by federal authorities. Musk's automation ambitions may have been crushed when Musk lost his final push to automation. In February, Mercedes-Benz was granted the first-ever Level 3 driving automation certification. This is a system that requires human intervention only in extreme conditions. It can be used on US roads.
Mercedes congratulated Tesla for Level 3 autonomy. Tesla then recalled over 362,000 vehicles due to concerns that Tesla's Full Self-Driving software (FSD), could increase crash risk.
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Since the advent of antilock brakes and cassette tape radio systems, car companies have been trying to outdo each other in the latest technology. Tesla set the standard so high that competitors took a while to catch up. But now, the dinosaurs in the auto industry are beginning to follow their lead.
Martin French, Berylls' managing director, stated that "Competition has begun to eat into Tesla’s market share." It's great news if you're a customer. There are many great electric cars out there.
French stated that the disruption in the industry isn't over. Tesla has maintained its advantage on timely over the-air updates. This means that even though people aren’t coming in to buy a new vehicle, Tesla can still make a profit. French stated that there is no one else who can deliver a car, then charge $11,000 three months later for a package.
Tesla's tech issues don't end at the interior. The exterior of its cars also leaves a lot to be desired. Tesla hasn’t completely redesigned any of their vehicles since the 2012 release of the Model S. The Model 3 and the S, two of its most popular models, are both sedans. This body style is one that the rest has abandoned five years ago. And by the time the Cybertruck hits the market (though it was announced in 2019, it's finally supposed to start production at the end of this year), the electric-pickup-truck market will be well established with models from the likes of GM, Rivian, and Ford, whose F-Series pickup trucks have been the top-selling vehicles in the US since the Regan administration.
Tesla recently hinted at facelifts for both the Model 3 and Model Y. Sam Fiorani from AutoForecast Solutions, an automotive analyst, said they were long overdue. He said that Tesla is moving more cars and that refreshing the designs of its vehicles will be a key part of its business.
Fiorani stated, "When you shift to higher-volume cars, you have to keep up with the Joneses." When you sell 300,000 vehicles a year and they are all parked in the same spot in a grocery store parking lot, customers suddenly want something that will set them apart from their neighbor.
As if this weren't enough, Tesla is losing its novelty in the way it sells cars. From the beginning, Tesla decided to abandon the dealer model and instead sell cars directly to customers. This gives Tesla greater control over pricing and provides a better margin over legacy competitors in terms of profit per vehicle. However, competitors are finding ways to beat Tesla's dealers who have been long protected by complex franchise laws in the US.
Audi and Ford are adapting their sales strategies to match Tesla's unique direct-sales model. These companies offer something Musk does not: a nationwide network of brick-and mortar locations that customers can use to have their cars serviced or repaired. Tesla's service network remains very small, with only 670 locations nationwide and 1300 mobile-service options available to serve approximately 2 million Teslas. Established companies have the chance to get lucrative business from Tesla and also look inside the cars through repairs. Mark Reuss, GM's president, told investors recently that Tesla dealers began repairing Teslas in 2021. GM has many dealerships across all 50 states. Tesla doesn't have a shop in 15 states.
Reuss laughed and said, "It's new business, which I love."
Tesla beats Elon, while Elon keeps Elon-ing
Oversupply is one of the most obvious indicators that a carmaker has serious problems. Oversupply can cause cars to languish on lots. This could be due to customers being underwhelmed with designs, other automakers releasing new tech, or damage to the brand's reputation. Tesla, which was once forced to construct vehicles in tents at its Fremont, California assembly plant, in an attempt to satisfy overwhelming customer demand, has long been immune to this problem.
In late 2021, Tesla signed a deal with Hertz to provide 100,000 vehicles to the car-rental giant. But cracks started to appear. While Tesla bulls and EV boosters applauded the move, days later Tesla's market capital reached $1 trillion, others in the industry wondered if the deal was an indication that Tesla had an overbuilding problem.
In December, Ivan Drury, an automotive analyst at Edmunds, stated that Tesla is falling into the same traps as all other automakers. That's a traditional way to move metal.
Musk lost his focus as Teslas began to pile up and the company's edge began to slip. Musk became obsessed with Twitter's takeover last spring. Musk spent $44 billion last year to acquire the social-media company. He sold off Tesla shares worth $22.9 billion and took on huge amounts of debt. Tesla shares plunged amid financial mischief, Musk's brash behavior, and reports about chaos at Twitter following his takeover.
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The rumors of Tesla's overbuilding problems had become a loud roar by the end 2022. Tesla offered a $7,500 discount on Model 3 and Model Y cars, as the rest of the automotive industry struggled to find inventory and held back on year end deals. Tesla stock closed 2022 down by 65%. Even the most ardent Tesla investors wondered if Musk was prepared to face an economic downturn in 2023.
Tesla's fall to the back of the pack does not mean that the company is doomed. French suggested that Tesla may need a dose of competition to break out of its stagnation. He said, "It's always beneficial to keep your toes on the ground in this business." "They have the cash to do whatever they want. Now we can see how they use it to stay ahead."
However, other industry analysts are concerned by the company's new position.
In a note, Dan Ives, a Wedbush analyst, wrote that Tesla's Cinderella ride was over. This came before Tesla's January earnings report. Musk now has to guide the company through the Category 5 dark storm, rather than focusing on his new golden kid Twitter, which we believe is a distraction.
Musk managed to calm some investor anxiety during the earnings call and confidently painted a positive picture for Tesla's year ahead.
While Musk's calm and collected attitude helped to stem the stock's yearlong decline, the company still has serious problems. The startup is losing ground in almost all areas where Tesla has held an advantage over the past 20 years, including vehicle design, tech, and sales strategy. Musk's legacy rivals are right behind him.
Nora Naughton, a senior reporter covering automotive for Insider, is
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By: nnaughton@insider.com (Nora Naughton)
Title: Tesla lost its edge — and Elon Musk has no one but himself to blame
Sourced From: www.businessinsider.com/elon-musk-ruined-tesla-technology-ford-gm-car-companies-evs-2023-2
Published Date: Sun, 26 Feb 2023 11:02:00 +0000
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