The abundant advancement in the technology that makes electric vehicles (E.V.)  a reality, combined with greater consumer interest over the past few years, has paved the way for companies such as Tesla to become a new titan in the automotive space. The innovation Tesla has accomplished during its tenure has led many of the household name brand automakers to search for ways to compete in the ever-developing E.V. space. This would therefore likely cause many to assume the industry is only thriving, however, recent setbacks and unexpected disappointments have recently called the once thought untouchable sector into question.  

Tesla for the past few years has been regarded with little concern regarding their financial performance and how they appear in the market. In November 2021 they reached a peak in market capitalization at $1.2 trillion, marking a 2000% increase in the two years following 2019, according to a Wall Street Journal article. Elon Musk has captivated consumers and investors. He has made himself appear as an entrepreneurial genius whose projects have found a way to continue making Tesla more and more of a mainstay in the eyes of the market and the average consumer. However, as Tesla hit its peak, the decisions Musk has made have since led to the company taking a step back, presenting obstacles many would label as avoidable.  

Shortly after Tesla hit its peak in market capitalization, Musk began selling a significant number of his privately owned shares, concerning the market about Tesla’s long-term strengths. According to the Wall Street Journal, Musk sold $38 billion worth of stock over one year starting in 2021 in preparation for the eventual purchase of X, formerly known as Twitter. In the time following Musk’s pursuit of purchasing the social media platform, his electric vehicle company found itself stagnant. With newer models having a failed release, and promises of more affordable cars not being met, many had labeled Musk as being distracted. These combined burdens met a peak in 2022, when the company announced it fell short of its expected vehicle deliveries, causing shares to decline 65% as a result. 2023 was a year marked as one of significant price cuts, in some cases reaching 20% less than original pricing. Musk thought Tesla would be able to handle it given their margins of profit. However, as the company continued to fail to release newer models, such cuts did not have much bearing on Musk’s plan to make E.V.s more affordable, therefore setting themselves up for disappointing news at year-end. The E.V. carmaker experienced a 30% decline in its overall stock price, marking its performance as one of the worst on the S&P 500. The decline in stock price was paired with reported deliveries falling short by a margin of $56,000, with expectations set at $443,000 but instead being met with $387,000, according to The New York Times.

In recent news, the company has shifted gears in a new direction with policies from the past. Recent attempts were made to reinstate a compensation plan first introduced in 2018. The plan promised Musk $48 billion for reaching certain financial milestones. It was previously voided by a Delaware court, but the plan is now within the hands of shareholders. Tesla asked its shareholders to vote on the matter they previously had in 2018, when about 73% approved of the original plan. Further initiatives have included Musk allowing the company shareholders to vote on whether the incorporation should relocate to Texas, given the size of the state, and Tesla arguing shareholders would have more say.  

As Tesla continues to lose money, most recently following their performance through the first quarter of the year, questions continue to grow in volume whether Tesla can maintain itself as a leader in the E.V. industry. Such matters were not aided by Musk’s recent initiatives including major layoffs of the team who was responsible for constructing the largest and most successful electric vehicle charging network in the United States, according to the Wall Street Journal. Pressure mounting on Tesla to introduce newer models at a cheaper price, especially considering the competition they face overseas from Chinese mega-conglomerate BYD, on top of repeated failures to fulfill past promises, may be what drags their position in the market down. As the world begins purchasing more electric vehicles, Tesla, a titan of industry in the space, is in danger.

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