When Trump was elected as US President back in November, Tesla (NASDAQ: TSLA) stock initially soared. Investors believed that Musk, as a key supporter of Trump’s bid for a second term in the White House, and his electric car company were set fair. However, since peaking in December, the shares have crashed 43%, wiping out $700bn in market cap.
All hands call
Among claims that Musk is distracted far too much by his role in the US administration, last Friday (21 March) he broadcast an all hands meeting. Therein he advised employees to “hang on to your stock”.
There is little doubt that investors have become increasingly concerned that the charismatic leader has taken his eye off the ball when it comes to managing the day-to-day running of the company.
The latest issue to beset the EV maker is with its Cybertrucks fleet. In a major embarrassment, Tesla has been forced to recall virtually every one — stainless steel panels are prone to fall off when driven at speed.
I am sure that owners were less than impressed to hear that the wrong type of glue had been used to hold the panels in place. Particularly as they cost as much as $100,000 each. In total, there have been eight recalls for the Cybertruck over safety fears in the last 15 months.
Increasing competition
One of the biggest headaches the company faces is increasing competition. Chinese EV maker BYD‘s share price soared recently following an announcement that its latest batteries could be charged in five minutes. If EV charging could be as quick as filling up at the petrol station, then that’s a really big deal.
But competition is coming from all different angles these days. More traditional car manufacturers are also muscling in. In France, Renault is ready to launch a new brand of ultra-cheap EVs. The Twingo will hit the market for under €20,000.
Beyond EVs
Tesla is a lot more than just EVs. It has long been in the energy storage business. But its biggest bet is in robotics. The all-hands call provided Musk with an opportunity to provide a glimpse into this futuristic technology.
There is little doubt that the company has a competitive advantage when it comes to building out a new generation of robots. Its expertise in electric motors, batteries, power electronics, and structural design will be crucial in the application of real world AI applications.
After years of research, Optimus is now in production. The robot has a 22 degree of freedom hand and forearm and is learning to walk and catch balls.
Musk predicts that Optimus will be the biggest product of all time – “10 times bigger than the next biggest product ever made”. Whether his fleet of robots will ever match the popularity of the ubiquitous iPhone, only time will tell.
I know one thing, Musk has a long history of failing to deliver on promises. Look at his promise on fully autonomous driving cars.
My fear is that the shine has well and truly worn off this once innovative company. I think that many private investors are starting to look beyond the hype now. I certainly won’t be investing.
