Elon Musk Has Forgotten What Tesla Is



Photo: ETIENNE LAURENT/AFP via Getty Images

What even is Tesla anymore? For about as long as the company has existed, Elon Musk’s car-manufacturing giant has been known for making luxury electric vehicles — big, expensive, fun cars that doubled as statement pieces about their owners. The brand should have reached its apex last year when the company finally released the Cybertruck, its nearly $100,000 Joe Rogan–proof moon buggy for crypto nerds. It was striking, the kind of futuristic design that Musk’s biggest fans would endlessly apologize for. And why not? It was fast, wild, and got a lot of attention.

But on Monday, just a few months after the Cybertruck launched, Tesla started retrenching. Musk wrote a letter to his employees announcing that 10 percent of the workforce, or about 14,000 people, would be losing their jobs. The news comes after a disastrous quarter for sales, months of cost cutting for its most popular models, increased competition, and an apparent (but still mostly mysterious) pivot to a robotaxi business. Even the niche buyers who would love the Cybertruck are facing problems that range from the predictably dumb to the absolutely terrifying, and on Monday Tesla was forced to halt sales while it deals with accelerators jamming (a serious issue that one industry publication described as turning the vehicle into a “6,800-pound land missile”). While the broader U.S. electric-vehicle industry is slowing down and grappling with the unfavorable macroeconomic conditions and major questions around demand and technology, Tesla’s problems go beyond those of its competitors. The company, not long ago a trillion-dollar phenom, right now looks muddled without any clear sense of what it makes or who its core audience is anymore.

Tesla still accounts for about half of all EV sales in the United States, but its sales have fallen about 13 percent so far this year, while the overall industry actually has grown by a tepid but respectable 3 percent, according to Kelley Blue Book estimates. In the past, Musk has pointed to many bigger problems that would hamper sales: higher interest rates, a sunsetting tax credit, and great competition. But these are general problems — challenges that might be expected to affect all the EV manufacturers in a more or less equal way. Ford, Tesla’s biggest domestic EV competitor by market share, saw its sales nearly double over the same period, even as its flagship model, the F-150 Lightning, has been singled out as a disappointment. (Cutting prices appears to have helped move the cars off dealer lots.)

Of course, Tesla still has a lot going for it, including a $500 billion stock market capitalization, which dwarfs any other automaker’s. Just one of its cars, the family-friendly Model Y, accounted for 96,000 sales from January through March — more than a third of the entire U.S. market, according to the Kelley Blue Book. (By comparison, Tesla sold 2,800 Cybertrucks during the same period.) But that’s not the kind of dominance that looks precarious in a market with more than 50 other fully plug-in vehicles — and that’s before you get into the hybrids and traditional combustion-engine vehicles. That may explain why Tesla shares have fallen 33 percent this year, making it the worst-performing stock in the S&P 500.

The company’s problems are far bigger than just quarterly sales fluctuations, though, and this is where the outlook starts to get stranger. Earlier this month, Reuters reported that Tesla is ending its production of a cheaper, $25,000 Model 2. Instead, Musk is focusing on a brand-new line of business: robotaxis. (Musk denied the report but later confirmed the robotaxi news.) Although few details about the robotaxis have been announced yet, the autonomous business would presumably be powered by so-called Full Self-Driving technology, which has been the focus of a long-running and sprawling criminal investigation. FSD mode has for years been accused of being misleading, and more than 700 accidents since 2019 have involved the technology.

The dream of autonomous vehicles has been around for more than a decade at this point, but even a behemoth like Apple hasn’t been able to bring a product beyond its own R&D labs. For Tesla to focus on this now, while its core business is in obvious trouble, is hard to understand. Musk has been shaving thousands of dollars off the sticker prices of his vehicles, but a glut of cheap, used EVs is now eating into new EV sales, too. The pivot smacks of Mark Zuckerberg’s aborted switch to the metaverse — a big expensive gamble on an unproven, experimental technology that nobody really wanted. Even Wall Street’s most sober analysts are skeptical that it will amount to anything anytime soon. “While we are prepared for Tesla to unveil an actual physical robotaxi-prototype this summer, we would urge caution on potential commercialization time-lines for a fully autonomous taxi service,” an analyst at Morgan Stanley said in a note.

Maybe Tesla is drifting because Musk’s attention has been elsewhere. In the past few months, SpaceX launched new vehicles into space, X rolled out its AI software, Musk personally sued OpenAI, his underground hyperloop company dug holes in Las Vegas, Neuralink successfully made a man into a cyborg, and Russians took control of some Starlink satellites. But the thing about all his other companies is that each one is clearly defined. With Apple out of the robotaxi business, maybe Musk saw an opening — there was nobody else doing it, so why not capture all the market share? For the better part of a decade, Tesla was nearly the entire domestic EV industry, after all. Without a new pipeline of products, Tesla is shrinking from the challenge of just making cars in a competitive market. If robotaxis are the Teslas of the future, it looks less like a considered plan than a chaotic attempt to regain some glory.

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