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As European sales slump, has Tesla run out of charge?

By Alex Kadukova, Senior Paid Social Strategist



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May 23, 2024 | 8 min read

New figures today show that April was Tesla’s worst sales month since January 2023, with a 2.3% fall compared with last year. Alex Kadukova of Impression takes a look at the bumpy road the brand has traveled over recent months – and at what might lie ahead.

A rain-flecked Tesla badge on a grey car

The carmaker's fortunes have hit a rough patch in recent months. / Austn Ramsey via Unsplash

Tesla, once regarded as a trailblazer in the electric vehicle industry, has recently faced a series of challenges leading to a decline in its reputation and stock prices – and now, its worst European sales month since the start of last year.

In 2023‘s Axios Harris Poll 100 reputation rankings, the auto brand‘s reputation plummeted 50 spots, dropping from 12th to 62nd in just one year. The company experienced significant declines in the areas of character, trust, culture, and ethics after facing a series of recalls and fines in recent years.

This decline can be attributed to various factors, including the intensifying competition in the electric vehicle market, the controversial reputation of Tesla‘s chief executive Elon Musk and allegedly false advertising surrounding promises of advanced technologies.

Falling reputation – and stock price

The decline in Tesla‘s reputation and stock prices can also, in part, be attributed to heightened competition in the electric vehicle market. As more traditional automakers and new entrants focus on electric vehicles, Tesla‘s once-perceived dominance is being challenged.

In the face of this competition, Tesla‘s strategic decisions, such as cutting prices and sacrificing profit margins to stimulate demand, are possibly proving to be unsustainable in the long run. This has led some to question Tesla‘s ability to maintain its position as a market leader and to create sustainable growth.

In addition to the unsustainable strategic choices, Elon Musk‘s personal behavior and controversial statements have sometimes overshadowed Tesla‘s brand image. Musk‘s behavior on social media platforms, including erratic tweets, some of which have led to accusations (including from the White House) of antisemitism, as well as his broadcasting seemingly impulsive and unfiltered remarks, have contributed to a divided public perception.

Furthermore, his involvement in legal battles with regulatory authorities and public figures has raised potential concerns about his leadership and the stability of Tesla as a company. The continued intertwining of Musk‘s personal reputation with Tesla‘s brand identity has resulted in possible challenges for the company in rebuilding trust and credibility.

Disappointments around AI

Tesla‘s allegedly deceptive practices regarding self-driving technology and vehicle range may have eroded consumer trust and confidence in the brand. Accused of using false claims to inflate sales figures and generate more revenue, concerns have come into play over whether the company can deliver on its promises and whether it breached the trust of its early supporters.

The alleged misrepresentation of features and capabilities to early buyers not only damages Tesla‘s credibility but, in my opinion, also reflects poorly on the company‘s commitment to innovation and ethical business practices. As the electric vehicle market becomes increasingly competitive, transparency and honesty are paramount for sustaining customer loyalty and investor confidence.

Meanwhile, Elon Musk‘s ambitions for Tesla‘s involvement in artificial intelligence (AI) highlight the company‘s strategic direction and technological aspirations. However, the lack of concrete progress or updates on projects like XAI raises some doubts about Tesla‘s ability to execute its plans effectively. Musk‘s emphasis on maintaining influence within the company while avoiding complete dominance in the AI market suggests a delicate balance that Tesla must strike to navigate the complexities of emerging technologies and market dynamics.

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What comes next?

The uncertainty surrounding Tesla‘s future stems from its shifting position in the electric vehicle market and the challenges it faces in diversifying its offerings and maintaining innovation. The company has lost its place at the top of the electric vehicle market, with China’s BYD claiming the top spot with a lower price range and hybrid models.

As competition intensifies and consumer preferences evolve, it seems that Tesla must reevaluate its strategic priorities. The need to adapt to changing market dynamics, regulatory requirements, and consumer expectations poses significant challenges that Tesla must overcome if it is to regain its footing and secure its long-term viability in the industry.

Alleged lies and false promises to customers have meant that Tesla, although still aesthetically appealing to consumers, has lost the appeal for investors. To me, Musk’s behaviors more and more suggest a lack of comeback potential.

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