Investor anxiety, competition… Can Tesla’s success continue?
For the car manufacturer Tesla, 2022 will end with a new sales record: about 1.3 million cars. The score for 2021 is dusted: +40%! A steady rise that has never stopped since 2010 and the IPO of the brand (seven years after the birth of Tesla and six years after the arrival of Elon Musk as a major shareholder).
Obviously, starting from scratch in the beginning, these increases were easier. But during the four years when the sales volume was significant, it looks spectacular: between +32 and +104% every year. It reinforces the impression of success that many people did not believe in it at the beginning…
Positive chain reactions
From the beginning, Elon Musk’s charisma played a big role. What industrialist could afford to operate at huge financial losses for nine years while maintaining bankers’ confidence and seeing stock prices rise? Because until the summer of 2019, Tesla remained in deficit! By losing large sums. The reactions to this success seem extraordinary: at the end of 2021, the stock market value exceeded 1000 billion dollars. 100 times more than all European manufacturers, Renault! Unreasonable.
Also read: According to historian Luc Mary, Elon Musk “has the future and the business sense, but not the man.”
Real advance and small delays
Even if boss Elon Musk often makes headlines with his hot temper, radical stances and media moves, Tesla’s success is not based on wind. The entire electric part of its models demonstrates real know-how and maintains a strong lead over all competition. With low energy consumption, so it is a real asset in terms of autonomy. Elon Musk also had the foresight to create a network of special chargers for Tesla owners to fast charge. They even work better than others. On the other hand, the brand lags behind after sales: repairs or spare parts often take a long time…
Really sustainable success?
Many are envious of Tesla’s success. But will this progress be sustainable? For Bernard Jullien, an economist specializing in the automotive sector, this success dynamic can stand: “Tesla’s great advantage is that it believes in electricity before the government authorities. By the time the electric market took off in 2012, Tesla had already improved its weapons. This was not the case for other manufacturers, who hurriedly filled their catalogs with electric models. Tesla’s infancy head start remains real in 2022.” But he warns that while the brand used to be a virtual monopoly, that’s no longer the case today. “Other manufacturers are expanding their electric offerings. In the high-end market where Tesla has positioned itself, its models will increasingly compete with Audi, BMW, Mercedes and Porsche. Furthermore, the future of electricity is for cheaper models: smaller cars, around €25,000. Like the upcoming R5 from Renault and ID. 2 from Volkswagen. In this niche, which will be the main one, Tesla is less armed than others..
Can the recipe be applied to others?
For Jean-Michel Prillieux, an analyst at Inovev (a service company, especially an analysis dedicated to the automotive industry), the recipe successfully implemented by Tesla cannot be duplicated for others under any circumstances: “There is a lot of talk about the exemplary nature of Tesla’s success. But this remains a special case. Its founder wanted to create a 100% electric premium brand. Unique in its time. But the recipe, which is so exceptional, cannot be changed: there is definitely no room for another serious electric and top-of-the-line brand. This success is also due to the personal talent of the very powerful Elon Musk and his financial support. If he could not tempt the bankers so much, he would be useless.”
Moreover, Elon Musk’s behavior and his incredible takeover of the social network Twitter will certainly not reassure investors who value him as less disruptive. After selling nearly $4 billion of Tesla stock in November, Elon Musk sold an additional $3.6 billion worth of shares as early as mid-December 2022.