[ad_1]
Elon Musk’s role as President Trump’s cost-cutting czar and his immersion in right-wing politics appear to be diverting his attention from Tesla at a perilous moment for the electric car company.
Tesla’s car sales fell 1 percent last year even as the global market for electric vehicles grew 25 percent. Mr. Musk has not addressed that underperformance, and he has offered no concrete plan to revive sales. He has also provided no details about a more affordable model Tesla says it will start producing this year. In the past, Mr. Musk spent months or years promoting vehicles before they appeared in showrooms.
And he has spent much of his time since the election in Washington and at Mr. Trump’s home in Florida — far from Austin, Texas, where Tesla has its corporate headquarters and a factory, or the San Francisco Bay Area, where it has a factory and engineering offices.
In the past decade or so, Tesla went from a struggling start-up to upending the global auto industry. The company sold millions of electric cars and generated huge profits, forcing established automakers to invest billions of dollars to catch up. Tesla’s success has been reflected in its soaring stock price, which helped make Mr. Musk the world’s richest person.
But now, he seems to have lost interest in the grinding business of developing, producing and selling cars, investors and analysts say. That could have serious ramifications for his company and the auto industry, which employs millions of people worldwide.
Even before he joined the Trump administration as the head of the Department of Government Efficiency, Mr. Musk’s running multiple companies had led investors and corporate governance experts to wonder whether he was spread too thin. Besides Tesla, Mr. Musk controls and runs SpaceX, whose rockets carry astronauts and satellites for NASA and others; X, the social media site; and xAI, which is developing artificial intelligence. And he wants to colonize Mars.
“We don’t have a C.E.O. who is fully focused on ensuring that Tesla remains a leader in the E.V. space,” said Brad Lander, the New York City comptroller, who oversees employee pension funds that own Tesla shares worth $1.25 billion.
Mr. Lander said he wanted Mr. Musk to stay on Tesla’s board and relinquish his chief executive duties to someone who would do the job full time. “That’s not too much to ask for,” Mr. Lander said. “That’s just the basic model of shareholder governance in America.”
Few, if any, executives have ever had such an array of responsibilities, said Eric Talley, a Columbia Law School professor who focuses on corporate governance. And while some of Mr. Musk’s businesses stand to benefit from his ties to the president, it is virtually impossible for Mr. Musk’s commercial and political interests not to collide in ways that could hurt Tesla and his other companies, Mr. Talley said.
“The more you split your loyalties,” Mr. Talley said, “the more it’s going to be difficult to claim you had an undivided loyalty to any company.”
Mr. Musk and Tesla did not respond to emails seeking comment.
In the past, he and the company’s board have defended Mr. Musk’s management of Tesla and dismissed the idea that he was spread too thin. They have pointed to the company’s soaring stock price and robust profits as evidence that Tesla has not suffered because of his other commitments.
Mr. Musk’s support for right-wing leaders at home and in Germany, Britain, France and other countries appears to have alienated significant numbers of customers.
There are signs that Mr. Musk’s political activities and reduced presence at Tesla are also stirring dissatisfaction within the company.
The discontent was apparent during an unusual meeting last month at the company’s offices in Palo Alto, Calif., where numerous employees vented their frustrations.
A senior executive who spoke at the meeting told the employees that he, too, was discouraged by Mr. Musk’s “mercurial” behavior and by the departure of some senior executives who had been a moderating influence. The chief executive’s polarizing social media posts and work in the Trump administration were driving away customers, prompting some employees to leave and making it harder to recruit new talent to Tesla, the manager said, according to an audio recording of the meeting reviewed by The New York Times.
The executive urged employees to focus on their work and tune out Mr. Musk’s comments on X and other forums. “I just kind of ignore it and think about what are we working on and is it exciting to me and is it having an impact?” the manager said. “That’s the best advice I can give for how to handle it.”
The recording was first reported by The Washington Post.
There are signs that at least some investors are having doubts, too. Tesla’s share price has fallen 25 percent since mid-December, though it is still up about 40 percent since the election. The S&P 500 stock index is up about 6 percent since the election.
Many investors still have faith in Mr. Musk. That’s why Wall Street treats Tesla as being more than three times as valuable as Toyota, the world’s largest automaker.
Optimistic investors believe that the company will develop cars that can drive themselves in most conditions. ARK Invest, an investment firm that has long been bullish about Mr. Musk’s endeavors, estimates that Tesla could control half of an estimated $10 trillion market for autonomous ride-hailing services.
“I see a path for Tesla being the most valuable company in the world by far,” Mr. Musk said in January. The growth, he added, would “overwhelmingly be due to autonomous vehicles and autonomous humanoid robots.”
What Mr. Musk has appeared surprisingly unconcerned about is Tesla’s biggest business today: selling cars.
During a conference call last month to discuss Tesla’s fourth quarter results, a financial analyst asked him to elaborate on his plans to sell more cars to take advantage of Tesla’s competitive advantage in technology that allows cars in some cases to steer, accelerate and slow down on their own. Mr. Musk said he didn’t understand the question and said the company already had millions of cars on the road.
The company has lost market share to BYD in China; BMW and Volkswagen in Europe; and Hyundai and General Motors in the United States. Some Tesla drivers like the musician Sheryl Crow are so upset by Mr. Musk’s political activities that they are selling their cars or saying they won’t buy another one.
In January Tesla’s sales were down 59 percent in Germany, 63 percent in France and 12 percent in Britain after Mr. Musk endorsed right-wing politicians and made inflammatory statements on social media. Tesla sales fell 12 percent last year in California, which accounts for nearly one-third of the electric cars sold in the United States.
“The hate is real,” Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management, wrote on an X post along with a photo of a Cybertruck that someone had defaced with an obscenity.
But political blowback is not the company’s only problem.
Tesla remains reliant on two vehicles, the Model 3 and Model Y, for 95 percent of its sales. BYD has more than a dozen electric models, some costing much less than $20,000. The Model 3 starts at $42,000 in the United States before taking into account a $7,500 federal tax credit.
Auto experts say Tesla badly needs a cheaper car to revive sales. But last year, Mr. Musk delayed indefinitely plans to build a low-cost car in Monterrey, Mexico, that would have cost $25,000.
The company has promised to begin producing a new model at its existing factories by the end of June, but it has not displayed a prototype or provided details. Analysts expect it to be based on the Model 3 and cost a lot more than $25,000.
“You would think they would be doubling down and trying to capitalize on the lead they have on other players,” said Michael Lenox, a professor of business at the University of Virginia. “It begs the question,” he added, “has there been a lack of attention?”
Some investors said that Mr. Musk’s lack of interest in selling cars was apparent in how little he had said about Mr. Trump’s initiatives that could hurt Tesla’s sales.
The chief executive of Ford, Jim Farley, last week said that some of Mr. Trump’s plans to repeal Biden era incentives for electric cars could force the company to lay off workers. But Mr. Musk has said nothing publicly about them.
Environmentalists in particular are very concerned that Mr. Musk, who once talked about electric vehicles as a solution for climate change, has allied himself with climate change deniers.
“It’s really concerning that Elon is more focused on D.C. than on advancing E.V. production,” said Katherine Garcia, director of the Clean Transportation for All campaign at the Sierra Club.
Mr. Musk has argued that electric cars don’t need government incentives. “You can’t stop the advent of electric cars,” Mr. Musk said in January. “It’s going to happen.”
[ad_2]
Source link
