Elon Musk’s grip on his electric vehicle crown is slipping

Elon Musk was laughing. Tesla, the entrepreneur’s electric car maker, had just made its first ever two quarters of profit and the ebullient chief executive was delighting in telling Wall Street just how he’d pulled it off.

A Morgan Stanley analyst on the call in August 2013 asked Musk what he thought about Tesla’s rivals. Stifling boyish sniggers, Musk said he was “glad to see” established auto makers gearing up to compete with Tesla.

Tesla is facing a number of headwinds.Credit:dpa

“I really do encourage other manufacturers to bring electric cars to market,” he said.

“It’s a good thing, and they need to bring it to market and keep iterating and improving and make better and better electric cars.”

Nine years later, the rest of the automotive industry has taken Musk firmly at his word – to the point where Tesla may be at risk of losing its electric vehicle (EV) crown.

Traditional carmakers, such as America’s Ford and Germany’s Volkswagen Group and BMW are aggressively expanding into dedicated EV production, having so far been slower than Tesla.

VW’s chairman, Herbert Diess, told staff at its Wolfsburg headquarters this week that Tesla’s ongoing expansion will “cost it strength”.

“We have to seize this opportunity and catch up quickly. By 2025 we can be in the lead,” Diess added, reported by the Financial Times. It added that VW foresees deliveries of 700,000 electric vehicles this year, contrasting with Tesla’s estimates of 1.5 million sales globally in 2022.

Yet that Tesla figure relies on a steady flow of deliveries through 2022. Already this year, harsh COVID-19 lockdown rules imposed by authorities in Shanghai have dragged the carmaker’s production estimates from its factory in the eastern Chinese city downwards.

Conditions were reminiscent of the early days of the pandemic, with Tesla staff reduced to sleeping on the factory floor in lieu of being locked in their homes and unable to work.

Nonetheless, Emmanuel Rosner, an analyst at Deutsche Bank, slashed his estimate of Tesla deliveries by 65,000 cars, saying in a research note: “Elon Musk had provided directional guidance of sequentially flat deliveries for the quarter, but the situation in China worsened subsequently, only improving in early June.”

Tesla’s production woes have helped open the door for its rivals.Credit:Bloomberg

Similarly, Credit Suisse estimates that the Shanghai shutdown has stalled Tesla’s production and delayed up to 90,000 cars.

A slowdown in China would be a huge hit for Tesla: the company’s Shanghai factory produced roughly half of its total cars delivered last year.

The Texas-based pure-play EV manufacturer has been expanding, having sent Musk himself to open the so-called “gigafactory” just outside Berlin in March.

Yet competitors are circling.

VW’s Diess has converted the German carmaker’s Emden facility into an all-EV production line focused on its ID.4 electric model. VW sold 30,000 of the family focused vehicles in the first three months of this year, accounting for a third of its 99,000 EV deliveries of all models in the same period.

That marks a 65 per cent increase over the German manufacturer’s EV sales during the first quarter of 2021, potentially suggesting that in a few years from now Tesla could be neck-and-neck with one of the companies it hoped to replace.

VW chief Herbert Diess is looking to take advantage of Tesla’s woes.Credit:Bloomberg

And it is not only VW. General Motors and Ford, the two kingpins of the US automotive industry, have begun looking further afield than their nation’s traditional petrol guzzlers.

Ford has this year been marketing an electric version of its long-lived Flareside pick-up truck, dubbed the F-150 Lightning, while even the throaty roar of its famous Mustang is giving way to an electrically-powered model: the Mach-E.

Yet there are doubts over whether Ford is able to overtake Tesla. Earlier this month it told dealerships to halt deliveries of the Mach-E cars, which are made in Mexico, after discovering an overheating-related flaw that makes its motors shut down. That could potentially affect up to 49,000 cars produced in the last 12 months.

Still, in the first three months of the year it shipped about 30,000 electric cars in the US, putting it only second in line to Tesla. While precise like-for-like comparisons are tricky given how each carmaker publishes its statistics, Ford’s rise in the EV market certainly threatens Tesla’s dominance.

Meanwhile, General Motors’ chief executive, Mary Barra, has hinted that the Michigan-based carmaker, and former owner of Vauxhall and Europe’s Opel, may return to this side of the Atlantic with an all-electric production facility.

He may have much to worry about, but perhaps the main woe on his mind is the multiple carmakers clamouring to steal Tesla’s crown.

“We are looking at the growth opportunity that we have now because we can re-enter Europe as an all-EV player. I’m looking forward to that,” Barra told a conference in May.

GM previously pledged to spend $US35 billion on EV research and development between 2020 and 2025. While the pandemic will have had an effect on that, there is no doubting the company’s intended direction of travel.

While it may not be good news for Musk, such competition is welcome for consumers. EV market choice has never been greater.

Figures from the International Energy Agency (IEA) show that global sales of electric vehicles doubled to 6.6 million in 2021, far higher from the 120,000 sold in the year 2012, as carmakers switch tack to keep up with where demand is coming from.

IEA figures suggest the market capitalisation of EV makers was 60 per cent higher than that of the world’s top ten carmakers combined. It said: “Such high levels can be primarily attributed to Tesla, which accounts for 80 per cent of the total market capitalisation of the 14 pure-play EV companies.”

While that may hold true for now, rising competition is likely keeping Musk up at night. Normally a prolific Twitter user, Musk has not tweeted for almost a fortnight.

It has sparked speculation that his focus could instead be on the $US44 billion purchase of Twitter – and the hurdles that come with it.

Other theories point to his ongoing court case against the US Stock Exchange Commission and its so-called “Twitter sitter” – a Tesla employee charged with moderating the chief executive’s social media posts about Tesla, lest he suggest something that might confuse its investors, as he did in 2018 when he posted that Tesla would be going private.

He may have much to worry about, but perhaps the main woe on his mind is the multiple carmakers clamouring to steal Tesla’s crown.

Telegraph, London

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