Tesla shareholders, who have yet to see a long-promised driverless car, are more worried these days about the man behind the company wheel.
Chief executive Elon Musk’s first 51 days as owner of Twitter have been chaotic – marked by mass firings (and some rehirings), bizarre tweets attacking outgoing White House chief medical adviser Anthony Fauci to Apple, and, late on Thursday, the suspensions of a host of prominent hacks, including CNN’s Donie O’Sullivan, who had written about the avowed free-speech champion’s decision to ban an account that tracked his private jet.
Tesla investors have had to deal with Musk having a simultaneous involvement in rocket group SpaceX, infrastructure business The Boring Company, and neurotechnology firm Neuralink before their chief executive set his sights on Twitter earlier this year. The distraction issue is not new.
But there are now growing signs that the increasingly polarising figure is hurting the Tesla brand.
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Musk appeared to have been genuinely shocked by the almost 10 minutes of booing that greeted him when he made a surprise onstage appearance at a gig of American comedian Dave Chappelle’s in San Francisco last Sunday.
Meanwhile, a sell-off of Tesla shares on Monday was also partly attributed to a survey from YouGov.com showing negative consumer perceptions of Tesla have topped positive opinions for the first time since the UK research firm added the carmaker in 2016 to a list of brands it tracks.
It emerged on Wednesday that the multibillionaire is continuing to use Tesla as an ATM, having raised $3.6 billion (€3.4 billion) by selling stock in the company during the first three days of the week. All told, Musk has sold almost $40 billion of Tesla stock since late year. Much of it taking place after he vowed in April to stop selling shares to finance his Twitter deal.
The South African native, who is said to have read the entire Encyclopaedia Britannica at the age of nine and learned to code within days of getting his hands on his first computer a year later, is estimated to have put in about $26 billion of his own money into the $44 billion purchase of Twitter – agreed in April and completed in October, after he backtracked on an effort to quit the deal.
The prospect of a driverless car, promised by Musk at least as far back as 2016, is as remote as ever
The figure included $4 billion of existing shares he held in the social media group. The rest was made up by bank borrowings and equity investors, including Oracle Corp co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal.
KoGuan Leo, the third-largest individual shareholder in Tesla and long self-described Musk “fanboy”, seems to have run out of patience.
“Elon abandoned Tesla and Tesla has no working CEO,” said the Indonesian-born businessman, who owns about 0.7 per cent of the company, valued at about $3.5 billion.
“Are we merely Elon’s foolish bag holders?” he asked. “An executioner, Tim Cook-like is needed, not Elon.” He was, of course, referring to the Apple chief executive.
Shares in Tesla, in which Musk first invested in 2004 and took over as chief executive and product architect in 2008, have fallen 60 per cent so far this year and almost 30 per cent since Musk completed the Twitter purchase in late October.
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CEO of An Post David McRedmond joins Ciaran Hancock to discuss the ongoing row between An Post and the UK’s Post Office over the implementation of post-Brexit customs rules, which is resulting in thousands of online purchases being returned to British retailers. Later on, we hear from two Dublin city centre business owners, Stephen Kennedy of Copper+Straw cafe and Sean Crescenzi of Happy Endings restaurant. They speak about the impact that anti-social behaviour and drug dealing, in and around Aston Quay, is having on their businesses and the immediate and long-term solutions they would like to see implemented to address the issue.
Its market value dipped this week below $500 billion for the first time in two years, coinciding with the entrepreneur’s dethroning as the world’s richest man by Bernard Arnault, chief executive of luxury goods giant LVMH. Forbes estimates Musk, who retains a 13.4 per cent stake in Tesla, is now worth about $177 billion, compared with Arnault’s net worth of $188 billion.
By contrast, the tech-rich Nasdaq index has dipped only 1.4 per cent since the Twitter deal went through, while General Motors and Ford, which are on their own electric vehicle journeys, have been broadly flat.
Tesla is on track to deliver 1.34 million cars this year, a multiple of the 368,000 it sold in 2019, with the growth almost single-handedly down to its Model Y, a more affordable car than its X and S models that went into production in 2020. The long-range version of the Model Y is being marketed in Ireland at €66,990.
Recent car price cuts in the US and China, Tesla’s two biggest markets, for December deliveries have added to the company’s woes. Alliance Bernstein analyst Toni Sacconaghi reckons the company will have to cut further in China to try to tackle softening demand and will need to make permanent cuts in the US for cars to qualify for rebates under president Joe Biden’s new flagship Inflation Reduction Act.
Margins are set to be squeezed further as a standard-range version of the Model Y is likely to make up a greater portion of its European sales next year.
Tesla is taking orders for this car in Ireland for delivery next year, at a price of €52,990 – 21 per cent below the long-range version.
We believe that Tesla’s brand has significant value related to the company’s leadership position in clean energy and advanced technology
Average prices of all its cars could drop to as low as $50,000 in 2023 from $53,500 in the third quarter of this year, Sacconaghi said in a recent note to clients.
“Tesla increasingly appears to have a demand issue. We believe demand weakness stems from increasing EV [electric vehicle] competition; Telsa’s narrow – and expensive – product family which is reaching saturation; and a weakening global economy,” he said.
The prospect of a driverless car, promised by Musk at least as far back as 2016, is as remote as ever, with Tesla facing a class-action lawsuit in the US from customers that paid for its autopilot and full self-driving (FSD) technology.
Goldman Sachs analysts this week lowered their estimate for Tesla car sales next year by 5 per cent to 1.85 million. They identify “key person risk” – code for Musk – as one of the potential threats to their buy rating on the stock.
“We believe that Tesla’s brand has significant value related to the company’s leadership position in clean energy and advanced technology,” they said. “Having consumer focus related to Tesla shift back to these core attributes of sustainability and technology will be important in our view, if Tesla is to meet or exceed long-term investor expectations.”
It’s a tough ask with a chief executive acting more erratically by the day.
