Tesla has been the leader in electric cars for many years, but recent sales figures show a different story. First quarter sales show only a 4% increase in sales compared to last year. This reveals the threat that competitive electric car manufacturers pose with new emerging technology and advances. Another threat is the high cost of electric cars.
Musk has cut prices as much as six times in recent months in the US to make electric cars more affordable. This move is to compete with the growing competitor market of Ford and Chinese manufacturers who are gaining ground in electric vehicle technology. Tesla, worth over $570 billion, is fortunate to use its robust financial resources to lower prices, but it may not be viable over the long term. Profits have already tumbled to 19% this first quarter from 30% last year this time.
There is some relief, however, as the US government ramps up support for electric cars with the introduction of a new emissions standard that could greatly benefit Tesla sales more than smaller electric car manufacturers.
Tesla is adamant that it will be able to reduce manufacturing costs by 50% for new designs bringing the price of electric vehicles within the $25 000 margin. It has already reduced costs by 10%, and a cheaper electric car version would cement Tesla’s position as the electric car giant.
But is it too little too late? BYD is introducing cars that cost as little as $11 600. Tesla’s ageing technology and models have lost market shares in recent shares. Tesla’s most significant advantage was its battery technology, the market leader in power storage capabilities. Now, brands like Chery and BYD are promising cars running on a sodium-ion battery, a disruptive new chemistry that potentially promises to make electric cars even more affordable.
Musk is now faced with the challenge of keeping up with modern leapfrog technology and new cheaper models if Tesla is to remain the number one electric car manufacturer globally. It is time to wake the sleeping giant known as Tesla.