Tesla’s latest quarterly earnings support were a harsh reality check for the hardcore Musk believers (Muskies?). The company disclosed a loss of over $400 million during the last quarter as it struggles to convince the Street that it can make money. Even worse, though, was a sharp decline in sales of its flagship Model S luxury sedan and Model X
space egg crossover. In short: things look bad for Tesla.
How bad is bad? Well, Tesla has lost more than $6 billion (with a “b”) over the last decade, so that $400 million loss isn’t like, the end of the world for them. It’s just bad optics. That sales dip, though? That is a big deal. According to Bloomberg, “combined deliveries of the Model S and X dropped more than 20% from a year ago, to 17,650 in the second quarter. The Model 3, meanwhile, saw deliveries jump to 77,550.”
The reason that’s actually bad news is that Tesla makes more money on the more expensive Model S and Model X vehicles. You could argue that, sure, the Model 3 was always more of a volume play– but I knew more than one Prius owner who traded up to a Model S, and at least one Model S lessor who traded into a Model 3. That means the choice to buy a Tesla is less about money and value, and– to some of its buyers– more about being an early adopter and making a point. So, until there’s a new Model S, Elon can reliably assume a good percentage of his Model S buyers will simply buy whatever new product he’s trotted out most recently.
Except that, you know, Elon Musk could be a crazy person who has decided that neither the Model S nor the Model X will be getting any kind of refresh any time soon. My reason for thinking that, by the way, was provided by none other than Elon Musk, who gave us this gem just a few days ago.
There is no “refreshed” Model X or Model S coming, only a series of minor ongoing changes. Most significant change in past few years was to use high efficiency Model 3 rear drive unit as S/X front drive unit. That went into production 3 months ago.
— ln(e) (@elonmusk) July 9, 2019
It’s worth noting, here, that I’m not the only one who thinks that’s weird. “They (the Model S and X Teslas) seem to be holding up OK without a redesign, but it’s unusual for a car company, especially a luxury maker, not to do a redesign,” sayes Michelle Krebs, a senior industry analyst at AutoTrader. “Usually, they’re about every four years, and maybe a re-freshening in between.”
On the business side of things, it’s not much better. Ever since losing a $40 million bet on his own mouth vs. the SEC last year, Tesla’s TSLA share prices have been on something of a wild ride. As I type this, the company has lost more than 23% of its share value since the start of this year.
I’m pretty sure all of this means that Tesla isn’t doing so hot, and may soon find itself a target of– let’s say an Apple buyout, shall we? Maybe VW? What do you guys think? Is this just a massive conspiracy to push electric technology back another forty years, or are the realities of biting off more than you can chew finally starting to catch up to Tesla and ol’ Musky? Let us know, in the comments.