Musk damaged Tesla's brand in just few months, fixing it will likely take longer

Elon Musk has been called a Moonshot Master, the Edison of Our Age and the Architect of the Future, but he's got a big problem at his car company and it's not clear he can fix it: damage to its brand. Sales have plunged for Tesla amid protests and boycotts over Musk's embrace of far right-wing views. Profits have been sliced by two-thirds so far this year, and rivals from China, Europe and the US are pouncing.
On Tuesday came some relief as Musk announced in an earnings call with investors that he would be scaling back his government cost-cutting job in Washington to a "day or two per week" to focus more on his old job as Tesla's boss.
Investors pushed up Tesla's stock 5 per cent Wednesday, though there are plenty of challenges ahead.
Who wants a Tesla?
Musk seemed to downplay the role that brand damage played in the drop in first-quarter sales on the investor call. Instead, he emphasised something more fleeting - an upgrade to Tesla's best-selling Model Y that forced a shutdown of factories and pinched both supply and demand.
While financial analysts following the company have noted that potential buyers probably held back while waiting for the upgrade, hurting results, even the most bullish among them say the brand damage is real, and more worrisome.
"This is a full blown crisis," said Wedbush Securities' normally upbeat Dan Ives earlier this month. In a note to its clients, JP Morgan warned of "unprecedented brand damage."
Musk's take on the protests
Musk dismissed the protests against Tesla on the call as the work of people angry at his leadership of the Department of Government Efficiency because "those who are receiving the waste and fraud wish it to continue."
But the protests in Europe, thousands of miles from Washington, came after Musk supported far-right politicians there. Angry Europeans hung Musk in effigy in Milan, projected an image of him doing a straight-arm salute on a Tesla factory in Berlin and put up posters in London urging people not to buy "Swasticars" from him.
Sales in Europe have gone into a free fall in the first three months of this year - down 39 per cent. In Germany, sales plunged 62 per cent.
Another worrying sign: On Tuesday, Tesla backed off its earlier promise that sales would recover this year after dropping in 2024 for the first time a dozen years. Tesla said the global trade situation was too uncertain and declined to repeat the forecast.
Here come the rivals
Meanwhile, Tesla's competition is stealing its customers.
Among its fiercest rivals now is Chinese giant BYD. Earlier this year, the EV maker announced it had developed an electric battery that can charge within minutes. And Tesla's European rivals have begun offering new models with advanced technology that is making them real Tesla alternatives just as popular opinion has turned against Musk.
Tesla's share of the EV market in the US has dropped from two-thirds to less than half, according to Cox Automotive.
Pinning hopes on cybercabs
Another rival, Google parent Alphabet, is already ahead of Tesla in an area that Musk has promised will help remake his company: Cybercabs.
One of the highlights of Tesla's call Tuesday was Musk sticking with his previous prediction that it will launch driverless cabs without steering wheels and pedals in Austin, Texas, in June, and in other cities soon after.
But Google's service, called Waymo, already has logged millions of driverless cybercab trips in San Francisco, Phoenix, Los Angeles, and Austin as part of a partnership with ride-hailing leader Uber.
A driverless future for Tesla owners?
Musk also told analysts that this driverless capability will be available on the Tesla vehicles already on the road through software updates over the air, and put a timeline on it: "There will be millions of Teslas operating autonomously in the second half of the year."
But he has made similar promises before, only to miss his deadlines, such as in April 2019 when he vowed full automation by the end of the next year. He repeated the prediction, moving up the date, several more times, in following years.
A big problem is federal investigators have not given the all-clear that Tesla vehicles can drive completely on their own safely. Among other probes, safety regulators are looking into Tesla's so-called Full Self-Driving, which is only partial self-driving, for its tie to accidents in low-visibility conditions like when there is sun glare.
On the positive side
In competition with rivals in the US, Tesla currently has one clear advantage: It will get hurt by less by tariffs because most of its vehicles are built in the countries where they are sold, including those in its biggest market, the US.
"Tariffs are still tough on a company where margins are still low, but we do have localised supply chains," Musk said Tuesday. "That puts us in a strong position."
The company also reconfirmed that a cheaper version of its best-selling vehicle, the Model Y sport utility vehicle, will be ready for customers in the first half of this year. That could help boost sales.
Another plus: The company had a blow out first quarter in its energy storage business. And Musk has promised to be producing 5,000 Optimus robots, another Tesla business, by the end of the year.
Pricey stock
Even after falling nearly 50 per cent from its December highs, Tesla's stock is still very richly valued based on the one yardstick that really matters in the long run: its earnings.
At 110 times its expected per share earnings this year, the stock is valued more than 25 times higher than General Motors. The average stock on in the S&P 500 index trades at less than 20 times earnings.
That leaves Tesla little margin for error if something goes wrong.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Hindustan Times

2 hours ago

• Hindustan Times

Elon Musk launches Tesla robotaxi in Austin: Here's how rides are priced

Tesla's long-hyped robotaxi was launched on Sunday afternoon, as per CEO Elon Musk who announced the rollout on his platform X (formerly Twitter). The first rides, priced at a flat $4.20 are now being offered in parts of Austin using driverless Tesla Model Y vehicles, stated a Reuters report. Several Tesla robotaxis were spotted Sunday morning navigating South Congress, a bustling neighborhood in the Texas capital, with no driver behind the wheel. A vehicle Tesla is using for robotaxi testing purposes on Oltorf Street in Austin(Bloomberg) Several social media users posted videos of robotaxis and noted that a single person was seated in the passenger seat, acting as a 'safety monitor'. The electric vehicle maker has not issued an official statement or provided details on the scope of the Tesla robotaxi launch, but a small group of influencers were invited to participate in a closely monitored pilot featuring 10-20 vehicles operating within a geofenced zone of Austin. Also read: Indian CEO slams Tesla for returning $1,000 fee: 'Elon Musk, do you know...' Texas lawmakers move to regulate autonomous vehicles The launch came days after Texas Governor Greg Abbott signed a new legislation requiring autonomous vehicle operators to obtain a state permit. Though the law does not go into effect until September 1, it signals a shift from Texas' previously hands-off approach to autonomous driving regulation. The law mandated operators like Tesla to attest to the safety of their AVs, provide emergency protocols for police and first responders, and comply with Level 4 autonomy standards, which means vehicles can drive themselves within specific conditions sans human intervention. Tesla deviating from norms by not relying on lidar/radar The Reuters report stated that Tesla was bucking industry norms by relying exclusively on cameras, without lidar or radar. Additionally, Musk has long argued that relying on cameras make Tesla's system both safer and more scalable, though critics have cited safety risks and past delays as cause for concern. Musk has spoken about self-driving cars over the years and now he is promising that safety will be a top priority as they roll out Tesla robotaxis in Austin. These cars will steer clear of bad weather, tricky intersections, and underage riders, and will only drive in areas where they are certain everything is safe, Musk said. The launch of Tesla's robotaxi is a big step for the company's future plans. Analysts think a lot of Tesla's long-term worth is dependent on how well they can commercialize their robotaxis and AI technologies, like humanoid robots. However, it is not all smooth sailing. Tesla's rival Cruise, owned by GM, recently had to suspend its operations following an accident, and both Waymo (Alphabet) and Zoox (Amazon) are operating under heavy regulatory watch. Tesla's unique approach, relying purely on cameras, sets it apart from the competition, but it also brings its own set of safety and liability issues. FAQs Q: Is Tesla launching robotaxis in Austin today? Yes, Elon Musk announced that Tesla has begun offering limited robotaxi rides in Austin as of Sunday afternoon. Q: How much do Tesla robotaxi rides cost? Tesla is offering the initial rides at a flat rate of $4.20. Q: Are the Tesla robotaxis fully driverless? Yes, the vehicles operate without a driver but currently have a front-seat 'safety monitor' during this pilot phase. Q: What level of autonomy do these vehicles have? Tesla's robotaxis are classified as Level 4 autonomous, meaning they can drive themselves under specific conditions without human input.

Mint

4 hours ago

• Mint

How Israel-Iran conflict is likely to inflate global oil prices? EXPLAINED

The conflict raging between Israel and Iran on Sunday, 22 June 2025, took an escalating turn as the US entered the war after conducting an airstrike on three nuclear sites of Iran. These heightened tensions are likely to inflate the global oil prices in case Tehran decides to retaliate against America's move. US President Donald Trump announced that America had destroyed three nuclear facilities in Iran, namely Fordow, Natanz, and Esfahan, through a coordinated airstrike amid the Israel-Iran conflict. Trump called out Iran and said that there will either be peace or tragedy for the Middle Eastern country, as the Western nation disclosed its preparedness to take out more targets in Iran. 'There will be either peace or there will be tragedy for Iran, far greater than we have witnessed over the last eight days,' Trump told reporters at a late-night media address on Saturday, 21 June 2025. Trump's move to carry out airstrikes in Iran has automatically involved the Western nation in the raging conflict in the Middle East. 'All planes are now outside of Iran's space. A full payload of bombs was dropped on the primary site, Fordow. All planes are safely on their way home,' he said in a social media post. As the tensions and uncertainties escalate in the global economy, investors around the world are afraid of Iran's retaliatory move against Israel and the US. The Strait of Hormuz is a strategically important global trade passage for crude oil imports and exports out of the Middle East. It connects the Gulf of Oman and the Arabian Sea with the Persian Gulf. According to earlier reports, this area witnesses nearly a quarter of the world's oil trade, making it a very sensitive region near a volatile conflict area of Iran. Concerns of investors and commodity traders around the world are rising as people expect Iran to block the region and potentially create disruptions in the shipping passage. Even though there has been no advancement from Iran's side on its threats to block the international maritime passageway, this sentiment of uncertainty is driving up the oil prices. JP Morgan, in an industry report, mentioned how the oil prices gained 3.6 per cent, crossing $78 per barrel for the first time since January amid the fears of the escalating situation in the Middle East. 'While markets are on edge, it seems like crude prices have some more room to rise before they start to cause real friction for the U.S. economy,' said the investment giant in its report released on 20 June 2025, before US carried out the hit against Iran's nuclear sites. According to an Economic Times report citing the investment bank, oil prices are expected to rise to as high as $120 per barrel if geopolitical tensions further escalate amid the ongoing conflict. The current oil prices show a 7 per cent chance of a worst-case economic scenario in which the impact will go beyond the reduced Iran exports, according to the news portal's report. Crude oil futures for both Brent and the West Texas Intermediate (WTI) closed lower after Friday's commodity market session. Investors' focus on Monday, 23 June 2025, will remain on how much the commodity takes a hit due to the increasing uncertainty in the market. The Brent futures of the September 2025 contract closed 2.33 per cent lower at $75.48 after the commodity market session on 21 June 2025. The WTI futures for the August 2025 contract also closed 0.28 per cent lower at $74.93 after the commodity market session into Saturday. Bloomberg Intelligence, in a research note, said that it is raising the near-term forecast for Brent crude to the $80-$90 range. 'We are raising our near-term Brent forecast to the $80–$90 range, with $100-plus oil increasingly likely given the elevated risk of Iran closing the Strait of Hormuz,' according to the research report cited by the news portal Moneycontrol. In June, crude oil prices jumped 24 per cent to reach near their $75 per barrel range as investors fear this rise may continue, fueled by Middle East tensions. (This is a developing story. Please check back for updates.)

NDTV

7 hours ago

• NDTV

Tesla To Launch Paid Robotaxi Service In Austin With Driverless Model Y SUVs

San Francisco: Elon Musk's vision of Tesla's future is set for a public test on Sunday, when a dozen or so self-driving cars in Austin, Texas start a limited, paid robotaxi service. Though Tesla is dispensing with a webcast product launch event helmed by Musk, fans will be scouring the internet for videos and reports from the coterie of invited riders that will be allowed to hail the small stable of Model Y SUVs for trips within a limited area of the city, accompanied by a Tesla safety monitor in the front passenger seat. The driver's seat will be empty. "Wow. We are going to ride in driverless Teslas in just a few days. On public roads," posted Omar Qazi, an user with 635,200 followers who writes often about Tesla using the handle @WholeMarsBlog and received an invite. The service in Austin will have other restrictions as well. Tesla plans to avoid bad weather, difficult intersections, and won't take anyone below the age of 18. Musk has said he is ready to delay the start for safety reasons, if needed. Tesla is worth more than most of its biggest rivals combined, and Musk has said that is supported by the company's future ability to create robotaxis and humanoid robots. For years, he has promised self-driving cars were just around the corner. Commercializing autonomous vehicles has been risky and expensive. GM's Cruise was shut down after a fatal accident and regulators are closely watching Tesla and its rivals, Alphabet's Waymo, which runs a paid robotaxi service in several US cities, and Amazon's Zoox. Tesla is also bucking the young industry's standard practice of relying on multiple technologies to read the road, using only cameras. That, says Musk, will be safe and much less expensive than lidar and radar systems added by rivals. Nonetheless, Musk says he is being "super paranoid about safety" with the rollout. "So far, this launch lags significantly behind the company's promise and what competitors have already delivered," said technology researcher Forrester's principal analyst Paul Miller. Fans have welcomed the caution and the long-awaited arrival. Qazi said on X, Tesla was launching "extremely cautiously, which is good."