Despite the rhetoric displayed by figurehead Elon Musk during an earnings call just a few months ago, Tesla (TSLA) is still a car company.
In the midst of yearning for a future stemming from robotics, artificial intelligence, and robotaxis, the latest production and delivery data shows that Tesla is managing to get a grip on clearing out its inventory of EVs.
However, the bigger picture exposes that under Elon Musk, the golden goose may be at risk of laying an egg — and not a golden one.
Related: Ford CEO sends a stern warning for American car buyers
Brandon Bell/Getty Images
According to data released on July 2, the present-day EV automaker produced 410,831 cars and delivered 443,956 vehicles during the second quarter of 2024. These results exceeded LSEG’s expected 438,010 deliveries, leading Tesla shares to jump early the same day.
However, these results also reflect a 4.8% dip in deliveries compared to the same time last year, when it delivered 443,956 EVs. In the midst of all this, the Texas-based EV automaker is facing some Texas-sized issues that the numbers do not tell by itself.
A line up of brand-new, old cars
Bloomberg/Getty Images
It is no secret that Tesla is facing a plethora of quality issues, including a recent recall involving the giant single windshield wiper on its Cybertruck single windshield wiper on its Cybertruck, and various owner complaints regarding “Dog Mode” failing to function after a new Tesla firmware update.
But Tesla seems to be holding off on something other manufacturers do on a tight schedule to keep themselves competitive. In the automotive industry, a “generation” of a car typically lasts between five and seven years, with something called a “mid-cycle refresh” or “facelift” occurring somewhere in the middle of its lifespan.
Honda
For example, the current Honda Civic was introduced to American buyers in 2021 as a 2022 model, featuring a brand new face and body that looked different from the outgoing model.
To keep buyers flocking to Honda showrooms, the manufacturer will add a few design tweaks, new colors or wheel choices and other distinguishing features that make the “new” model a worthy upgrade from the previous one.
Honda
In May 2024, Honda unveiled the 2025 Civic models, a facelift featuring new front and rear styling, new wheel choices, more exterior color choices, optional Google built-in software, and most importantly, optional hybrid engines that boast impressive performance numbers and fuel economy figures.
Tesla does refresh its cars. The automaker has previously refreshed and given styling updates to its Model S and Model X vehicles. Earlier this year, it updated the lower-priced Model 3 compact sedan, giving it more features and new styling.
One model it has yet to give an update to is the Model Y, the brand’s bestseller. Since 2020, minor tweaks, electronic and software additions have been added to Tesla’s compact crossover, but no significant styling changes have been done
No Model Y “refresh” is coming out this year.
I should note that Tesla continuously improves its cars, so even a car that is 6 months newer will be a little better.
— Elon Musk (@elonmusk) June 9, 2024
When Tesla released the updated Model 3 earlier this year (known as the “Highland” to Tesla enthusiasts), Tesla fanatics were excited to see if the new car’s ambient lighting, ventilated seats and mirror-mounted blind-spot monitors were going to come to an updated version of the Model Y very soon.
But, CEO Elon Musk disappointed fans, writing on X (formerly known as Twitter) that “No Model Y ‘refresh’ is coming out this year,” adding that “Tesla continuously improves its cars, so even a car that is six months newer will be a little better.”
Although Musk may be right that a six-month-old car may be better technologically, the reality is much different from a buyer’s perspective.
The pressure of competition
NurPhoto/Getty Images
Tesla is not the only automaker in town that makes EVs, and its competition is no longer limited to startups like Lucid (LCID) or Rivian (RIVN) . Elon Musk’s newest rivals are established automakers like BMW, Ford, Hyundai, Kia and Mercedes-Benz.
These brands are well-known to auto buyers and are supported by extensive dealer networks across the United States and beyond. Additionally, their EV offerings provide choices that are eating into Tesla’s market share and fueling overall EV sales growth.
Tesla’s bestselling Model Y now finds itself in a cornucopia of choice that includes Kia’s EV6, Hyundai’s Ioniq 5, the Ford Mustang Mach-E, Volkswagen’s ID.4, and the Volvo C40, among others.
As a result, data from Cox Automotive released in April 2024 shows that Tesla’s share of the EV market was as high as 61.7% in Q1 2023; increased competition had led the share to dip to 51.3% in Q1 2024.
The creator and the destroyer
Apu Gomes/Getty Images
Another pervasive factor affecting Tesla in the background is Elon Musk himself. Although he is admired by many, the antics and politically charged rhetoric that has been on display for the world to see both in real life and on his social media platform X (formerly known as Twitter) has actually affected Tesla’s ability to sell cars.
Related: Elon Musk’s online persona is making Tesla seem seriously uncool
In an April 2024 study, market intelligence firm Caliber found that many potential Tesla buyers were turned off by the highly polarizing online persona of CEO Elon Musk.
They found that while over 83% of Americans connect Elon Musk with Tesla, they gave the automaker a consideration score of just 31%, indicating that a large percentage would not consider Tesla when considering an electric car.
“It’s very likely that Musk himself is contributing to the reputational downfall,” Caliber CEO Shahar Silbershatz said.
Additionally, The New York Times published a new report on July 2, where a poll of more than 7,500 of its readers around the country revealed that many associated Tesla with Musk and vice versa, and are turned off by the brand because of the connection.
One reader, an IT worker in Baltimore named Achidi Ndifang, told the Times that Musk’s racist rhetoric was the main reason he and his family shied away from the automaker.
“My mother was seriously debating buying a Tesla,” Ndifang said. “As a Black person, I felt like it would be an insult for my mother to drive a Tesla.”
Another reader, a Seattle-based Microsoft product designer, told the paper that he plans to buy a VW ID.4 instead of a Tesla because in a Tesla, “You’re basically driving around a giant red MAGA hat,” referring to the baseball caps sported by presumptive Republican presidential nominee Donald Trump and his supporters.
More Business of EVs:
- New study suggests EVs are supercharging an impending environmental crisis
- GM President has bold plans for an iconic sports car’s EV resurrection
- Ford CEO says this iconic model will “never” be an EV
Epilogue
SOPA Images/Getty Images
A glaring detail that I found odd on July 2 was that Elon was not a “reply guy” when it came to responding to Tesla-related posts on X.
The term “reply guy” refers to someone who is omnipresent in the comments, or replies section of a post on social media. Part of Elon Musk’s notoriety is his willingness to pop into any conversation on X that revolves around his companies, politics, as well as content fueling racist, sexist, transphobic and homophobic discourse.
On the day that “better than expected” delivery and production numbers were released, I expected Musk to make boastful statements about Tesla, or tease some new project.
He didn’t do any of that. In fact, according to his post activity and replies on X (which are publicly available for anyone to see), the only mention of the delivery numbers came from a repost of Tesla’s post about the numbers.
Instead of replying to Tesla fans, he interacted with dozens of politically charged posts as well as posts from the once-suspended account of the conservative news satire site The Babylon Bee.
You would think for a CEO that is notorious for his social media fixation and endless posting, that he would post about Tesla’s positive numbers, right?
Tesla is expected to present its Q2 2024 earnings on July 23 and present something new on August 8. Perhaps he won’t stay silent during those events.
Related: Veteran fund manager picks favorite stocks for 2024
