The year is not ending on a high note for Elon Musk, the second-richest man in the world.
Tesla’s shares have been in free fall since Musk expressed interest in buying Twitter, and that was in April. Now that Tesla has lost more than half its trillion-dollar valuation, investors are fuming and calling for blood.
As the calls for Musk to step down grow louder, is Twitter the culprit behind Tesla’s predicament? Or is it a convenient scapegoat to deflect our attention from the real issues plaguing Tesla?
The impact of Twitter
Since taking over Twitter, Elon Musk has faced mounting criticism for his management style, erratic policies, and hypocritical stance on free speech.
As a result, people unimpressed with Musk are making their displeasure felt. More and more users are abandoning Twitter, opting out of buying a Tesla car and cancelling their Starlink satellite internet service.
Fickle consumers are not uncommon, but the problem becomes amplified when investors start getting upset at Musk’s controversial behaviour.
From their perspective, Musk is spending too much time at Twitter at the expense of Tesla. Instead of dealing with Tesla’s declining fortune, investors are witnessing Musk busying himself with inconsequential and nonsensical stuff.
However, to attribute the collapse of Tesla stocks entirely to Musk’s buffoonery at Twitter would be feeding into his megalomania. After all, Tesla’s stocks did not rebound even after Musk signalled that he would step down as Twitter’s CEO.
In fact, the problem began when Musk started dumping Tesla stock to fund his Twitter acquisition, leading to a fall in Tesla’s price.
As for the subsequent chaos at Twitter, it might have accelerated Tesla’s decline, but it is definitely not its cause.
Inside the woes of Tesla
With or without Twitter, Tesla is a company besieged by problems that would have spooked investors as they come to a head.
Firstly, while Tesla cars are marketed as luxury vehicles, their build quality leaves much to be desired as hundreds of thousands of cars have been recalled over a software glitch.
Separately, in a reliability study, Tesla was ranked near the bottom as one of the most unreliable brands. It is no surprise, that in the face of shrinking demand, Tesla has started offering discounts.
Another problem Tesla faces is its tendency to underdeliver. The Cybertruck — Tesla’s version of a pickup — is a perfect example.
Due to delays in production, Tesla is now behind companies such as Ford, which have already rolled out electric pickups ready for purchase in its showroom.
As the pioneer in the EV industry, there was leeway for Tesla/Musk to overpromise when selling a vision. But now that traditional car makers have entered the EV market, Tesla no longer has that monopoly to corner consumers into buying its cars.
Lastly, it is hard to turn a blind eye to the lawsuits surrounding Tesla. From allegations of sexual harassment to racism, Tesla is also being sued for misleading drivers and facing a criminal probe into its self-driving software.
All these problems combined have conspired to make Tesla look like a sinking ship, even to bystanders with no interest in the firm.
Ultimately, Tesla’s abysmal performance is part of a tech decline in the face of an impending recession. And there is very little Musk or Twitter could have done or undone to change the outcome of Tesla.
Featured Image Credit: Sky News