Vehicles for sale at a Tesla store in Vallejo, California, US, on Thursday, March 2, 2023.
David Paul Morris | Bloomberg | Getty Images
The ranks of would-be Tesla buyers in the United States are shrinking, according to a survey by market intelligence firm Caliber, which attributed the drop in part to CEO Elon Musk‘s polarizing persona.
While Tesla continued to post strong sales growth last year, helped by aggressive price cuts, the electric-vehicle maker is expected to report weak quarterly sales as early as Tuesday.
Caliber’s “consideration score” for Tesla, provided exclusively to Reuters, fell to 31% in February, less than half its high of 70% in November 2021 when it started tracking consumer interest in the brand.
Tesla’s consideration score fell 8 percentage points from January alone even as Caliber’s scores for Mercedes, BMW and Audi, which produce gas as well as EV models, inched up during that same period, reaching 44-47%.
Tesla did not respond to a request for comment. Musk in the past has blamed high-interest rates for curbing consumer demand for big ticket items like cars.
Caliber cited strong associations between Tesla’s reputation and that of Musk for the scores.
“It’s very likely that Musk himself is contributing to the reputational downfall,” Caliber CEO Shahar Silbershatz told Reuters, saying his company’s survey shows 83% of Americans connect Musk with Tesla.
Reuters spoke to five marketing, polling and car experts who said controversies surrounding Musk’s increasingly right-wing politics and public statements are weighing on Tesla’s brand and demand.
“It is hard enough to win sales without getting into politics,” said Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management.
Economic fears, the lack of affordable new models and rising competition from cheaper rivals like China’s BYD have also been cited by Wall Street analysts as putting pressure on Tesla.
Overall electric vehicle sales in the U.S. are forecast to increase 15% in the first quarter of this year, according to estimates by researcher Cox Automotive. Tesla sales are projected to increase by 3%.
“The EV slowdown is shaping up to be a Tesla slowdown,” Cox analyst Stephanie Valdez Streaty said during a conference call Thursday.
New car registrations for Teslas in California â their biggest market in the U.S. â posted their first drop in over three years in the fourth quarter of 2023 even as EV sales rose overall.
At least five analysts cut Tesla’s target price last month, saying the automaker could post disappointing first-quarter delivery results. Tesla shares are down nearly 30% year to date.
Musk’s outsized personality benefited Tesla as he promoted tackling climate change by reimagining cars as stylish, electric computers on wheels that could beat gasoline guzzlers in looks, performance and handling.
Tesla achieved breakneck annual sales growth for more than a decade.
Courted controversy
In recent years, the billionaire courted controversy with comments and actions including his embrace of the Republican party and endorsement of anti-semitic comments on X. Musk has denied being anti-semitic.
When asked by an investor during a January 2023 conference call if his political comments were hurting Tesla’s brand and sales, Musk said he was “reasonably popular,” referring to his then 127 million followers on X, formerly known as Twitter.
“Whether you hate me, like me or are indifferent, do you want the best car, or do you not want the best car?” Musk said at another event in November.
Brand valuation consultancy Brand Finance found Tesla’s reputation fell in 2023 in the United States, the Netherlands, France, United Kingdom, and Australia. Tesla’s reputation did not suffer in China, where access to news on the company and its CEO may have been limited, and Germany.
In the U.S., a survey by consumer analytics firm CivicScience shown exclusively to Reuters found that 42% of respondents had an unfavorable view of Musk in February, up from 34% in April 2022 when Musk disclosed his stake in Twitter.
“A modest but growing number of EV shoppers are increasingly put off by Elon Musk’s behavior and politics and are now finding viable alternatives to Tesla in the marketplace,” Ed Kim, president of California-based consultancy AutoPacific said.
That group includes Jonny Page, a London-based consultant who works with climate-focused startups and will purchase an EV this summer. It will not be a Tesla.
Page, 36, said his decision is partly because of concerns over Tesla safety but mostly about Musk’s “unhinged” behavior. “I don’t want to put a single penny in that man’s pockets,” Page said.
‘I can’t go back to gas’
Tesla’s reputation is still sterling with many.
Market researcher S&P Mobility shows Tesla has the highest loyalty among major car brands, with 68% of owners choosing another Tesla when they bought a new car last year.
Christian Cook, a Tesla Model 3 owner in Texas who identified as leaning right, said Musk’s actions made no difference and that he was “becoming numb to the shenanigans.”
Kat Beyer, a climate activist in Wisconsin, said she wanted to avoid Tesla because of Musk’s support for Republicans, but wound up buying a Model Y last year because of a lack of EVs with reliable charging infrastructure.
“It’s hard to drive the car associated with him,” Beyer said. “But I can’t go back to gas.”
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Iran’s President Ebrahim Raisi has died in a helicopter crash, state media reported on Monday.
The helicopter carrying the president came down on Sunday in a remote and mountainous region of the country’s north-west, according to Tasnim News Agency, which is closely linked to the elite Revolutionary Guard. Rescue teams battled for hours to reach the crash site, with fog and snow hindering efforts.
State media showed video footage of a convoy of ambulances struggling to make their way through fog up a mountain road. The crash site was in Arasbaran Forest near the border with Azerbaijan, according to Tasnim.
Iran’s foreign minister Hossein Amir-Abdollahian was also on board the helicopter as part of Raisi’s entourage.
They were returning from a visit to the country’s north-western province of East Azerbaijan, where they took part in the inauguration of a dam. The president of northern neighbour Azerbaijan was present at the ceremony as well.
Raisi, 63, was elected in 2021 in a vote with a record-low turnout in the country’s history. He had been expected to seek re-election next year, and his name had emerged in political circles as a top candidate to succeed Iran’s supreme leader, 85-year-old Ayatollah Ali Khamenei.
The president showed unconditional loyalty to the ayatollah and maintained close relations with the Revolutionary Guard. After decades of tense relations between Iran’s presidents and the supreme leader over the extent of their powers, Raisi was the first to end these tensions.
The time it’s taking for some of China’s electric-car makers to pay suppliers is ballooning — a further sign of stress in the nation’s increasingly cutthroat auto market.
Nio Inc. was taking around 295 days to clear its receipts payable, the vast majority of which are owed to suppliers, at the end of 2023 versus 197 days in 2021, according to the most recent available data compiled by Bloomberg. Xpeng Inc., another US-listed Chinese EV maker, was taking 221 days to honor its obligations to vendors and related parties, up from 179 days, the data show.
Elon Musk’s Tesla Inc., by comparison, only took around 101 days, and that period has remained largely stable in the past three years.
The extended payment cycles are indicative of the pressure many automakers are under in China, where economic growth remains sluggish and consumer sentiment is subdued. That’s translated into reduced demand for electric cars, and the once fast-growing market is now beset with intense price wars and crunched profit margins.
Since Beijing phased out a national subsidy program for EV purchases in 2022, some smaller manufacturers have been pushed to the brink. WM Motors filed for restructuring in October, and Human Horizons Group Inc., the owner of premium EV brand HiPhi, suspended operations for at least six months in February.
“Everybody’s suffering,” said Jochen Siebert, managing director at consultancy JSC Automotive. “For manufacturers, price reductions mean less money coming in. So the money they owe to their suppliers may be necessary for them to remain liquid.”
Representatives for Nio and Xpeng didn’t respond to requests for comment.
Delayed payments are starting to have a knock-on effects at auto-parts suppliers, Siebert said.
“Tier-three or four suppliers really get bitten, because they can’t pass it on,” he said, adding the EV sector may see a “messy consolidation” as suppliers go bankrupt, quickly causing production issues for automakers down the line.
Indeed Jiaxing, Zhejiang-based Minth Group Ltd., a supplier of exterior body parts, saw its accounts and notes receivables surge more than 40% to 4.74 billion yuan ($656 million) as of December from the end of 2020, while its cash and equivalents shrank by almost one-third to 4.2 billion yuan over the same period, according to data compiled by Bloomberg.
Hunan Yuneng New Energy Battery Material Co., which is a major supplier to BYD Co., according to data compiled by Bloomberg, saw its accounts and notes receivables more than triple to 10.43 billion yuan at the end of 2022 from a year earlier, while cash reserves fell to 435.2 million yuan.
“The price war won’t end soon and the stress eventually will be delivered to suppliers,” said Zhu Lin, a Shanghai-based managing director with turnaround management firm Alvarez & Marsal.
“We’ve seen more car components producers approaching us to improve their performance and some of them are thinking about offloading unprofitable businesses,” Zhu said. “The weak ones in the supply chain will face a high risk of being kicked out of the game.”
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A view shows a crater that appeared after a Russian missile strike on a structure at a resort, amid Russia’s attack on Ukraine, in Kharkiv, Ukraine May 19, 2024. REUTERS/Valentyn Ogirenko
Valentyn Ogirenko | Reuters
Russia struck a busy lakeside resort on the edge of Ukraine’s second largest city on Sunday and also attacked villages in the surrounding region, killing at least 11 people and wounding scores.
The missile strikes were the latest in what have been constant Russian attacks in recent weeks on the Kharkiv region of northeastern Ukraine, where Russian troops have launched an offensive.
Valentyna, 69, had blood running down her face at the lakeside resort area where her home had been destroyed and a busy restaurant nearby been obliterated. Her husband was killed down by the water, she said, gesturing to the area near the shore where there was now a crater, rubble and corpses.
“To lose my husband, to lose my house, to lose everything in the world, it hurts, it hurts me,” she shouted through tears “They (the Russians) are animals, why do they need to kill people?”
Prosecutors said six people were killed there, one was still missing and 27 wounded. Rescuers said the initial strike was followed by a second strike around 20 minutes later, targeting emergency crews at the scene in a so-called “double tap”.
“There were never any soldiers here,” said Yaroslav Trofimko, a police inspector who arrived after the first strike and was then caught up in the second. “It was a Sunday, people were supposed to be here to rest, children were supposed to he here, pregnant women, resting, enjoying a normal way of life.”
Another five people were killed and 9 injured later in the day in two villages in Kupiansk district. Local governor Oleh Syniehubov said Russian forces shelled two villages of the district with a self-propelled multiple rocket launcher.
President Volodymyr Zelenskyy again called on Western allies to supply Kyiv with additional air defence systems to protect Kharkiv and other cities.
“The world can stop Russian terror – and to do so, the lack of political will among leaders must be overcome,” Zelenskyy said on Telegram.
“Two Patriots for Kharkiv will make a fundamental difference,” he said, referring to Patriot missile defence systems. Air defence systems for other cities and sufficient support for soldiers on the front line would ensure Russia’s defeat, the president added
