autoevolution

GM's President Was Right About Tesla's Future

Making a free, important accessory optional for $400, then $275, then $200, might not look like something that’s signaling important issues for an auto company the size of Tesla. Looking at the bigger picture, however, might reveal some aspects that are not at all good signs for investors, customers, and fans of the brand. Here’s what you should keep in mind for the near future.
Elon Musk at Cyber Rodeo Event 6 photos
Elon MuskElon MuskElon Musk on a Bear with a Dogecoin HeadElon MuskElon Musk
Tesla is undeniably the company that managed to spark the EV revolution. Toyota or Nissan may have had their hybrid or electric products as well in the same timeframe, but nothing comes close to what this American carmaker did to a very conservative industry since the Model S came to fruition.

Jumping through a lot of hoops to achieve profitability and a stock price that almost nobody expected, Tesla did almost everything right. Deliveries, marketing, not having a press department but getting billions of dollars of free coverage, a CEO that connected with customers, impressive affiliate offers for those that promoted the brand, unique experiences, crazy powertrains, a car launched into space… Name it, and you’ll see they’ve done it. You can dislike them, you can say Musk’s annoying, you can have your own thing against this automaker, but you can not ignore what this manufacturer did for the entire world.

Tesla changed a very secretive and conservative industry. It forced giants like Ford, Volkswagen, and Toyota to rethink their strategies and made governments understand that for the sake of our common good we need zero-emissions cars, trucks, and vans on the road. It also sparked courage in others. That’s why we have carmakers like Rivian, Lucid, Canoo, Nikola, and VinFast doing their own thing.

But something’s wrong with Tesla now. And it has been for quite some time.

It might only get worse from here


The EV maker raised car prices for the U.S., China, and Europe markets on two separate occasions just in 2022. Last year, there were six total hikes for each model in the lineup. The last one happened across the board in October 2021, when Tesla added $5,000 for the Model X and Model S, while the 3 and Y got $2,000 increases each.

Why did they do this? Nobody knows. Elon Musk’s company never says anything about these changes, and it doesn’t plan on doing so very soon. The health crisis, inflation, supply chain issues, raw materials becoming increasingly more expensive, investments for expanding the Gigafactories… They could’ve all been used as a reason. But we’ll never know for sure what’s going on behind the curtains. There’s no transparency in this regard.

And it’s a pity. A company this size and with such cool customer-centric history should find some time to talk with its fans and customers because a PR department is non-existent. You shouldn’t be coerced into getting Elon Musk’s attention on Twitter for a short clarification or to solve an issue that potentially affects thousands.

While people might’ve accepted price increases as part of the ownership experience, the drop that filled the bucket came with a modification of a simple accessory – the mobile connector. If you’re not a Tesla customer or fan, then you should know this product is a cable that comes with various adaptors which enable you to charge from different outlets. Granted, it’s very slow. It can only give you two to five miles of charging per hour. But without it, you’ll have to source your own.

People are justifiably angry at this move because it reflects an Apple-like behavior. You can buy a new phone, but if you want to keep using it… Well, the charger is sold separately.

Existing customers might not feel anything about this change because they might have two or three mobile connectors lying around. But for a newcomer that’s not close to a Supercharger and doesn’t have a Power Wall installation coming or another form of home charging solution enabled, it’s a hassle.

Plus, Tesla didn’t drop the prices of its new cars to accommodate the mobile connector becoming an option. It’s now just something you’ll have to pay extra for.

What’s even worse is that Elon Musk confirmed this change on Twitter only after customers discovered it, and it all happened during the Spring Holidays. Sales Advisors have been telling people that are waiting to receive their brand-new EVs different things. Some confirmed the mobile connector is out for good and available only as an extra purchase, while others told buyers they’ll find it in the frunk.

It's certainly not looking good


But this is not all. Supercharging costs doubled, quality control has plummeted, service waiting times have grown, warranty issues are being dismissed on frivolous grounds, the people that paid for Full Self-Driving got nothing in exchange for their effort and availability to provide Tesla with immense quantities of necessary data, and spare parts are extremely hard to find because the carmaker is keen on ramping up deliveries of new cars.

Now add into the mix a CEO that’s involved with multiple companies, is very active on social media, has a knack for virtual tokens with no real-world value, is interested in doing all sorts of other things than just focusing on making Tesla better, is in the middle of a scandal with the SEC and investors, and you’ll get a not so pretty picture. It doesn’t look good at all.

What’s next for Tesla? Well, not that much. Going overboard, we can freely assume that you could get all the hardware, but without the software that unlocks its potential. It’ll be simpler for the company to add all the speakers for the Premium Audio and just not let you use some of them if you don’t pay the right amount of money, for example. Some over-the-air updates might as well become premium options, and you’ll maybe even have the chance to experience a subscription for other features. At this point, everything’s on the table.

This whole mishap has been correctly predicted by General Motors President Mark Reuss. He said Tesla might be facing a lot of issues sooner rather than later.

“Don’t forget. You’re going to have to compete with legacy vehicle makers from the industry that were buying credits. This is changing rapidly, I think. You’re going to have to compete on a lower price point, with a lower margin, high volume, high scale vehicle if you’re going to be a full-service automaker to get that advantage. That’s what you see us doing with our purpose-built EVs,” said Mark Reuss.

It appears that his predictions became reality faster than everyone anticipated.

Moreover, having Musk as CEO might’ve guaranteed the very survival of the famous EV maker, but his current behavior is now questioned by almost everyone. Some issues need fixing before they become international controversies. For now, let’s see what the jury will decide regarding compensations that are requested by investors. The judge already ruled the executive lied.

On top of all this, it seems like Elon Musk doesn’t want to find some common ground with the current U.S. administration. This might make life even harder for the company he’s leading. The stock is already in a downtrend, as well. It might not reach the over $1,200 value per share anytime soon.

Let’s just hope Tesla’s board will have a chance to talk with the CEO and establish a strategy that’ll avoid a grim scenario. Because, for now, the American EV maker is in troubled waters.

Competitors are ready. They had enough time to prepare.

 
 
 
 
 

Would you like AUTOEVOLUTION to send you notifications?

You will only receive our top stories