Why is Tesla struggling? | About That

Elon musk's Tesla is now one of the worst performing companies on the S&P 500 thanks in part to really brutal sales numbers so far this year these might be the roughest days we've seen in years for Tesla between January and March Tesla delivered around 387,000 Vehicles worldwide that's almost 100,000 fewer than it delivered the quarter before and 8.5% less than the same quarter last year we've missed on the first quarter and we've not just missed but it is a considerable considerable undershoot but even as that news sent the market into a mild Panic those watching closely weren't all that surprised because Tesla's been struggling for a while now its annual revenue grew by only 3% in 2023 and take a look at its stock value a steady downward Trend if you look at Tesla's history and the number of advantages they had even three four five years ago that's where you start to feel like maybe this isn't just a quarterly issue but a long-term indicator the company even slashed prices in 2023 hoping to Spur sales but clearly those cuts weren't enough so why is Tesla struggling to meet investor expectations well part of it has to do with the EV industry as a whole and part of it has to do with the company [Music] itself let's start with the wider Market forces at play here while EV sales are still growing faster than gas powered car sales in most countries their popularity really has started to cool off especially in North America with consumer interest in all electric vehicles seemingly coming to a stall prices are dropping abs are having a bad time like a really bad time I've said it before and I'll say it again ordinary people just don't want EVS we know part of the hesitation around EVS is about whether cities are actually ready to support a major shift from gas to electric cars mainly whether there are enough charging stations in the right areas and whether the stations that do exist even work can you two connect charger meet rivan rivan meet charger connect eror detected a recent Canadian study on the state of charging infrastructure here found that less than half of people who actually owned an EV were satisfied with their province's public charging infrastructure BC and Ontario OR reported just a 20% satisfaction rate range anxiety is a really important one so the infrastructure that goes along with it there's been some high-profile stories about people getting stuck whether it was Canada or people using an F-150 to drive long distances the other part for consumers is about money High interest rates in both Canada and the US have made it considerably more expensive to lease a car and E in general are still more expensive than gas powered cars and so you have people that were looking at maybe buying a Chevy bolt or maybe buying the new Tesla Model and have said you know what this round I'm G to go back and buy a $440,000 car internal combustion engine I know how it works I know what the you know the upkeep of it it's going to be and I don't want to take on that extra cost right now to be clear Tesla is still by far the global leader in EV sales having sold close to 5 million EVS since its Inception but right now they are underperforming they're not growing in the way shareholders expected them to while at least some of their competitors are doing the opposite Tesla's biggest rival for example Chinese company byd actually had a better sales quarter in late 2023 and right now the two companies are basically neck and neck part of Bo ID's sudden rise likely goes back to the cost the starting price for its newest car the Auto 3 is currently listed at less than $117,000 us while the cheapest Tesla you can buy right now is about 47,000 well the Chinese electric vehicle industry is kind of a unique circumstance they have got full support from the government and they've also got control of most of the global lithium supplies what this equates to is Chinese automakers can build cars far less uh costly and then they can sell them for a lower MSRP and still make a profit just a couple of years ago there were only a handful of EV models to choose from in North America Tesla really dominated the market but this year there are more than 50 to choose from and that's growing Ford says its EV sales grew 86% year-over-year Hyundai saw their sales increase 62% year-over-year you look at how many more companies are out there competing with them for this exact corner of the market that they held for years uncontested uh it makes sense that that they're they're getting beat up but there are also a few things very specific to Tesla that might have investors on [Music] edge one thing that differentiates Tesla from pretty much every other EV company is its full steam ahead approach to self-driving cars their R&D in this area carries massive Revenue potential for the company but also a lot of risk there it goes okay okay oh my gosh it did it oh my gosh that's crazy unbelievable right now Tesla's self-driving software is characterized as a level two or partially automated system which requires that the human still monitors all tasks and can take control at any time the goal is to get it up to a level five in the near future which would mean zero human attention or interaction is required I I'm extremely confident that level five or essentially complete autonomy will be with uh what will happen and I think will happen very quickly investors often list Tesla's self-driving Tech as one of the main reasons that they expect the company to outperform its competitors in years to come but so far the road to full self-driving Vehicles hasn't been all that smooth last year Tesla agreed to recall 2 million Vehicles nearly every car It produced over worries about the safety of its autopilot software there were issues at intersections issues following speed limits and hundreds of reported crashes some fatal new video of a dramatic crash on the Bay Bridge a Tesla believed to be an autopilot started breaking causing an eightc car pile up on Thanksgiving the company's also dealing with a string of lawsuits related to its autopilot software most of which argue that drivers shouldn't be solely responsible when things go wrong that the software should also bear some of the blame this Tesla's owner says he had a close call when he says his Tesla suddenly veered into the path of an oncoming car who and we're seeing some of these cases now either in or close to coming to uh trial and depending on how they resolved it could be another hit to Tesla in terms of financials and also really image which brings us to the next part of this story Tesla's reputation according to One Market survey the percentage of respondents who said they trust or like Tesla has fallen from more than 80% to under 60 since the beginning of 2022 and the percentage of respondents who said they'd consider buying a Tesla fell even further from More than 70% to around 30% meanwhile The Firm says their scores for Mercedes BMW and Audi all of whom also make EVS have all been hovering between 44 and 47% the authors of the report attributed at least part of this discrepancy to musk himself the people that were going to buy a car because they love Elon Musk and just want to be a part of that they probably already bought their car the question now is how do you get the Suburban couple outside of Calgary or outside of Toronto or Montreal that just need to get their kids to soccer practice and drive into the office three or four days a week how do you get them and I think you don't necessarily get them by having a a slightly Mercurial CEO who's going on Twitter rants about whatever the latest in the culture war is analysts differ in how they view Tesla's long-term trajectory some believe this is just a blip for the company and that as EV infrastructure builds up interest rates drop and Tesla's self-driving Tech improves the company will come out ahead and there is a lot of political support behind the EV Market you know here in Canada for example the federal government is trying to pass legislation requiring all new vehicles sold in Canada to be electric by 2035 others see this recent news as a warning sign that Tesla may actually be heavily overvalued and that the risks it carries might outweigh its [Music] potential

Channel: CBC News

Views: 242,941

Keywords: Tesla, Tesla stock, Elon Musk, Elon, Musk, Electric vehicle, EV, China, Canada, About That, CBC News, Andrew Chang, CBC Explore

Id: UNymuiv-Vts

Length: 9min 23sec (563 seconds)

Published: Fri Apr 05 2024