Then, inexplicably, Musk took to Twitter and pushed Tesla off a cliff. This year, as he sold tens of billions of dollars worth of Tesla stock to fund the Twitter deal and appeared to be banking his reputation on taming the feuds rocking one of the most controversial places online, the shares of Tesla fell by more than 60%. Its collapse is deeper than that of most of its rivals and far deeper than that of the S&P 500, which is down about 19% for the year.
Not all of Tesla’s problems are due to Musk. Like other global manufacturers, the company has faced Covid-related production delays in China. It struggled to ramp up production at its new facilities in Austin, Texas, and Berlin. Steady interest rate hikes from the Federal Reserve and the looming prospect of a recession have also dampened Tesla’s fortunes. On Twitter, Musk repeatedly blamed the Fed for the slump in Tesla shares.
But analysts and investors I spoke to said these were side issues. “Tesla is Musk and Musk is Tesla,” said Dan Ives, an analyst at Wedbush Securities who follows Tesla. Unlike nearly every other automaker, Tesla spends next to nothing on advertising. Musk is and has long been the company’s sole distributor and chief evangelist, the main driving force behind the global desire to buy Teslas. So any change in Musk’s cultural position will also affect the company’s position. Musk’s time running Twitter has been “massive brand destruction for Musk and for Tesla,” Ives said.
It is not impossible for Tesla to get rid of these problems. Musk has pledged to step down as Twitter’s chief executive as soon as he finds a replacement. Ives and Gerber told me that if this happens relatively quickly and Musk somehow becomes disciplined to avoid polarizing positions online, Tesla could quickly return to its former glory.
Tesla still enjoys some advantages over its rivals, in particular its network of more than 40,000 chargers around the world, which makes Teslas easier to charge than other electric vehicles. But the federal government plans to spend billions installing chargers across the country, most likely eroding Tesla’s lead. (Tesla has opened its chargers in Europe to cars made by other automakers; it has announced plans to do so in North America as well.)
Colin Rusch, an analyst at investment firm Oppenheimer & Co., pointed out that Tesla also enjoys a years’ lead in some electric vehicle technologies. It has invested heavily in advanced battery design and more efficient manufacturing processes, areas where its rivals are just getting started. Still, Rusch recently lowered his expectations for Tesla’s stock price, citing increasingly negative sentiment towards Musk.