Tesla’s perilous road ahead


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A year ago, Tesla looked “destined to revolutionize the auto industry,” said Neal Boudette at The New York Times. The Silicon Valley automaker’s electric Model S sedan was the darling of luxury-car buyers, and its “affordable” Model 3 was set to bring “emission-free driving to the masses.” Its self-driving Autopilot technology appeared more advanced than the competition’s. And CEO Elon Musk was touted as a tireless visionary, propelling Tesla’s market value past that of Ford and General Motors. “What a rough ride it’s been since then.” The Model 3’s rollout has been “mired in glitches and delays,” and Tesla has hemorrhaged money quarter after quarter. Last month brought a pileup of bad news, with a recall of 123,000 Model S sedans and the fatal crash of a Tesla in Autopilot mode. Suddenly, the automaker is entering a “make-or-break period,” said Tim Higgins at The Wall Street Journal. Sales have slumped, and Moody’s has downgraded the company’s credit rating over concerns that it’s burning through $2 billion in cash a year. Analysts are now questioning whether Tesla has enough money to make it through the end of 2018.

“The road ahead is looking more perilous,” said The Economist. Despite never generating a profit, Tesla has for years been buoyed by true-believer investors “who are rarely put off by bad news.” But even they seem rattled now, with the stock sliding 10 percent since the end of February. Every bad headline only adds to the doubts. Take the recent recall, which involves corroding bolts that affect power steering. Such recalls are common among the world’s automakers, but in Tesla’s case, “it reinforces a view that the company is much better at developing whizzy technology than at mastering the humdrum business of making cars in quantity.” And that’s a big problem, because Musk has “bet the future” on Tesla’s ability to mass-produce affordable cars. “Nothing matters to Tesla’s future as much as Model 3 production,” said Jack Stewart at Wired. The car, which has 450,000 preorders, has been stuck in “production hell,” with only 2,425 Model 3s made in the fourth quarter of last year. Musk has taken to sleeping at the factory to ramp up output, which has since improved markedly, to 2,020 in the last week of March. But even if Musk hits his 5,000-a-week target by June, the waiting list to actually receive a new Model 3 will remain “several years long.”

It’s always interesting to watch Musk push the tech envelope, “from a super-fast underground hyperloop to space voyages to Mars,” said Steven Mufson at The Washington Post. But it’s no less fascinating that the “more prosaic mission of assembling a passenger car here on Earth” is where he has truly struggled. “For all the hoopla surrounding” Musk’s genius, Tesla sold just 103,000 cars last year; by comparison, General Motors sold 3 million. “The fantasy that Tesla …read more

Source:: The Week – Business

      

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