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Commentary: What 2023 holds for Tesla and why it might be time for Musk to go


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Production needs to be increased rapidly to meet Musk’s delivery promises, but without compromise on quality. The challenge thereafter will be to expand the brand to smaller vehicle types than the Model 3, while retaining the cachet that allows for premium pricing.

With nearly 100,000 employees worldwide, Tesla will also need to be more cost conscious. This is especially true as material and component input prices are rising rapidly.

Tesla also needs to do more to capture value from cars that are already in use. The company is notable for owning much of the inbound supply chain for its batteries and their materials, but it has been slow to identify earning opportunities from the entire life cycle of its cars.

Competitors including VW Group and Renault in Europe and NIO in China are pioneering new “whole life cycle” business models that capture value for manufacturers from the sale, use, second use, and eventual recycling of vehicles. This makes Tesla’s “sales only” approach look dated.

TESLA’S DECLINING SHARE PRICE

Investor sentiment is obviously key when it comes to Tesla’s declining share price, however. The company could manage this by being more cautious when announcing forecasts for production, sales, new models and technology breakthroughs to avoid surprising or disappointing investors.

With this in mind, it’s not surprising that, for investors, the biggest issue to be resolved at Tesla may be Musk’s role. There are two questions involved: Is Musk sufficiently engaged in the future of Tesla and can Tesla continue to prosper from association with Musk?

In Tesla’s latest tranche of stock sales in December 2022, Musk reduced his share of the business to 13.4 per cent, although he remains the largest single shareholder. Some observers linked this sale to the need to finance other business interests, notably Twitter.

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The risk is that Musk becomes more of a liability than an asset to the business. While also running Twitter, Musk may not be able to give Tesla the attention it needs as it grows, and as its competition becomes more intense. But Musk’s maverick personality, and especially the management style he’s displayed while running Twitter, could potentially damage the Tesla brand and unnerve Tesla employees and investors.

Indeed, the characteristics that have made Musk such a successful disrupter may not be so appropriate for a maturing and institutionalised multinational. Musk and Tesla have long seemed synonymous. It seems that the time may have come for that to end.

Peter Wells is Professor of Business and Sustainability at Cardiff University. This commentary first appeared in The Conversation.



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