This Could Save Tesla
It's back to basics.
Tesla sales are experiencing what can only be described as terminal decline. Their profit margin has shrunk to functionally nothing. Their Robotaxi rollout is a painful embarrassment, rather than being the revolution that was promised. Obviously, Tesla is miles away from running this kind of service profitably, which has shaken investor confidence. On top of all that, Trump is expected to eliminate EV subsidies and regulatory carbon credits, both of which have significantly boosted Tesla’s bottom line over the past few years. It seems the walls are closing in on Tesla. And, quite frankly, there is a huge part of me that is glad about that fact. Musk not only helped put Trump into power but has also effectively mainstreamed white supremacy and Nazism — he deserves everything that’s coming to him. Unfortunately, Tesla isn’t just Elon; it is comprised of thousands of employees, and they don’t deserve to be crushed. So, there is also a small part of me that is glad that Musk is taking possibly the only action that could save Tesla.
That action isn’t leaving Tesla. Major investors have made it clear that Musk’s departure from Tesla would decimate its value (read more here). As I pointed out in previous articles, if Tesla was valued in line with other automakers, it would operate in negative equity, with bankruptcy knocking on its door. So no, Musk can’t just step away, even if he wanted to.
Instead, he has fired Omead Afshar, Tesla’s head of sales for North America and Europe. These are arguably Tesla’s most important markets, as they are the only ones that grant them protection from Chinese competition. Yet, sales in Europe have dropped by more than 50%, and US sales are down by up to 8.6% compared to last year, despite the EV market growing in both regions. This, obviously, wasn’t Afshar’s fault — after all, people stopped buying Teslas out of protest and disgust at the Cybertruck. But Musk, in his infinite wisdom, fired him anyway and will now take on the role himself.
Technically, this is a moronic idea. But, with the context of how Musk grew his empire and how he managed to screw it up, this might be one of the few things that could save Tesla.
Musk isn’t an engineer or an inventor. Technically, he had almost nothing to do with the Roadster or the Model S, X, 3 and Y. The same is true for the Falcon 9. What he was really good at was sales. He could sell the vision of these projects to investors and customers better than anyone else, even if his promises seemed impossible. And he pushed the actual engineers to bring his vision to fruition.
This was true even in his early days. When he was starting his first company, Zip2, he placed the company’s bog-standard computer in a larger, fancier case. He told investors it was a supercomputer which they needed to run their superior code. This borderline fraud worked, and investors invested $3 million in Zip2. However, what is telling is that they demanded Musk step down as CEO, and he was replaced by someone who knew what they were doing. Musk isn’t a good manager, CEO or engineer; the past few years should make that painfully clear. But no one can sell a vision like him (something he has in common with that guy whose salute he did).
Hell, he is literally the Simpsons’ Monorail guy. Hyperloop was demonstrably a far worse solution, no matter how you spin it, than any high-speed rail. The engineering and economics behind it are simply awful. Yet he was able to get California to divert funds away from its high-speed rail plans and plough them into his vapourware. There is more to that story, so click here to read it.
Where the wheels began to fall off is when Musk drank his own Kool-Aid and started to believe he was the genius engineer he had painted himself as and so should spearhead, lead and micromanage projects. We saw the beginning of this with Hyperloop, but it only got worse with vision-only FSD, the Tesla Semi, the second Roadster, the Cybertruck, and Starship — all projects that his heavy hand derailed into failure and disaster.
It is these terrible products, combined with Musk’s political backlash, that are sinking Tesla.
So, putting Musk in charge of sales is not only getting back to basics, returning to the setup that enabled Tesla to grow, but it could also distract Musk from micromanaging Tesla’s R&D and from engaging in politics.
It could also genuinely revitalise Tesla’s sales. Yes, many people will never buy a Tesla now (including me), but don’t forget that not everyone has the same moral consistency when it comes to their actions. After all, statistically, most people who rightfully hate Bezos still shop at Amazon. So, as long as Musk actually focuses on the job at hand, a significant portion of Tesla’s lost sales could come back.
Musk only achieved his current status by failing upwards. He is closer to a con man than a competent CEO, but he has always had deep enough pockets and an array of investors to overwork his engineers and try to bring these exaggerations to fruition. Returning to this setup could at least salvage Tesla’s sales and protect the company’s cash flow. Is this a long-term solution? Absolutely not. Tesla would need substantially more than just good sales for that. It would need to pay down a significant portion of its debt so it can survive its stock inevitably crashing, completely overhaul FSD to, at the very least, be moderately safe, and invest in next-generation EV technology to compete with companies like BYD.
The real question is whether Musk’s inflated ego will allow him to step back into his former role or whether he will still try to micromanage Tesla into an early grave. Only time will tell.
Thanks for reading! Don’t forget to check out my YouTube channel for more from me, or Subscribe. Oh, and don’t forget to hit the share button below to get the word out!
Sources: Bloomberg, Reuters, The Panel, Will Lockett
It won’t happen. Musk can’t control himself enough. He’s already off starting a new political party. His narcissism will make a recovery impossible.