The phrase ‘The Elephant in the Room’ means there’s ‘a major problem or controversial issue that is obviously present but avoided as a subject for discussion because it is more comfortable to do so.’
So, you’re considering buying a new car and you have had your eye on a specific Tesla model for a while, but this guy named Elon Musk has been in the news, like every day, making crazy decisions:
- On Monday, Tesla’s not going to build an ‘affordable EV’ for the masses, but is planning to announce a ‘RoboTaxi’ on August 8.
- On Tuesday, deliveries are down so Elon thinks he’ll lay off 10% of Tesla’s workforce (and those that were laid off found out when the security guard at the front gate wouldn’t let them enter because their employee badge didn’t work anymore).
- On Wednesday, the Tesla Supercharger team is gone – all of them! What’s up?
This is the pace of changes going on at Tesla with Elon at the helm…
The ‘elephant’ can wait a moment while I give you a bit of personal history. In the 80s I worked for Boeing in Seattle. And with the market for airliners being a cyclical thing, we were always either hiring or laying off staff. I survived these layoffs by just being in the right place at the right time, but many friends lost there jobs along the way. Then I worked for Intel during the 90s and early 2000s. As a manger for part of that time, I got to know how the employee ‘retention’ system worked so we were always prepared for the next downturn. Intel’s business was also very cyclical. Staff is expensive and it’s one of the first places management looks to trim cost.
Enter Tesla (and Elon). During the first quarter of 2024 Tesla delivered 386,810 cars, a 20.1% drop from the previous quarter. Why the downturn? Well, I have an opinion:
- Lots of discounts during Q4 2023 to reduce inventory, plus Federal tax incentives were still in effect (many of which were likely to disappear for certain models in 2024)
- The 2024 Model 3 ‘refresh’ (Highland) that many decided to wait for started to ship in Q1 2024, but not in large quantities, while there’s still considerable 2023 unsold inventory.
- A Model Y ‘refresh’ (Juniper) is on the horizon (2025?), so if you’re not in a hurry to buy now then this is something to wait for. If the Model 3 refresh is any indication, it will be worth the wait!
- Tesla prices are bouncing all over the place. “Am I getting the best deal, or should I wait?” “Will the Performance Model 3 (just announced) qualify for the Federal tax credit?” What do you know, it does! OK, that’s the car I want, but I know I’ll have to wait a while… etc.
So, let’s get back to the elephant. Elon’s in the news. Elon’s getting lots of heat. We, the EV consumer, only see and hear about the crazy things Elon does and says (of which there are many). But what about Tesla (we’ll leave the CyberTruck out of this discussion for the moment)? Tesla has:
- Best supercharger network
- Best software
- Best self-driving capability (that’s constantly improving)
- Good build quality (that’s constantly improving)
- Great products, becoming ever more affordable
- Best Net Promoter Score (customer loyalty) score in the industry
- And the Model Y is the ‘best selling car (of any type) in the world!’)
Will Elon’s latest decrees help or harm the Tesla brand? In the press, there’s lots of speculation, some of which get’s back to Elon’s mental state (ah, there’s the elephant). Is Elon being ‘rational’ when making these decisions? Good question(s)!
I’m going to climb out on a proverbial limb and say that I think Tesla is fine. I agree that Elon adds quite a bit of drama to the equation. Also, there’s a lot of credible competition on the horizon (here’s a good recent video from Ryan Shaw on this topic). But Tesla leads the industry in innovation that makes their cars more efficient, more reliable, and for Tesla’s benefit, more profitable than any of their competition (we’ll leave the discussion about China for another post). See also: Sandy Munro: Tesla’s NEW innovation is light years ahead.
What I’m not saying is that ALL of Elon’s decisions are ‘rational’. But he has built the best car company in the world and I think he cares that it continue to be the best, and he believes that his decisions are in line with that objective.
PS – Yup, that Kool-Aid tastes great!
