Seems like every year up until COVID-19 struck, I predicted the demise of Tesla. The electric-vehicle startup company was perpetually knee deep in debt, and always struggling to meet ridiculous self-imposed production targets. I was wrong every time, but I still eye Tesla with something of a skeptical eye.
Tesla Predictions: What to Watch in 2024
The company, helmed by controversial billionaire entrepreneur Elon Musk, has never produced a vehicle at its announced pre-production target price, and flouts industry oversite in much the same way a camper might wave away a mosquito.
Still, it’s impossible to deny Tesla’s amazing success. The EV giant sold more than two million cars globally in 2023, and brought two new factories up to speed, one near Berlin, Germany, and one in Austin, Texas. Also, the more we learn about how Tesla cars are built, the more learn about how innovative the company is. By most accounts, Tesla is building EVs more cost effectively than any other manufacturer, including many state-supported Chinese car builders.
Still, the electric-vehicle juggernaut seems headed for tough times. In a dubious move to stem falling market share in the U.S. and abroad, Tesla last year began slashing the price of all four of its models. The result was a marked uptick in Tesla sales—and an industry-wide ripple effect, resulting in slowed sales of competitive product, and a collapse in used EV prices.
Tesla today reported 4th-quarter financial results. While Tesla revenues are up year over year, the company missed guidance estimates, driving stock prices lower. More importantly, despite the increase in income, earnings per share (EPS), and adjusted net income are both down, this as the company begins to feel the impact of lower sticker prices on the bottom line.
As Sam Fiorani, Vice President, Global Vehicle Forecasting at AutoForecast Solutions said of Tesla during a recent episode of the Consumer Guide Car Stuff Podcast, in regards to slipping profit margins, “Welcome to the auto business.”
Indeed, competition and other market realities have caught up with Tesla, the one-time failing, later high-flying, EV startup, and the company’s role in the marketplace seems changed forever. Tesla is no longer an untouchable EV sales machine, but an electric-car maker facing stiff competition in the U.S. from companies like Ford, General Motors, Hyundai and Kia, and in China from the likes of Nio, BYD, and Great Wall.
Tesla isn’t going away, the company is very good at what it does, and has a huge head start on other makers when it comes to producing electric vehicles profitably. But, now that the company has ceded to market pressure to compete on price, it has lost much of its marketplace advantage. Here I’d like to share a few relatively safe predictions as to what 2024 has in store for Tesla. Have your own predictions? Leave us a note down below.
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Tesla in 2024
Cybertruck
Tesla’s radical-looking and long-awaited pickup truck arrived late last year to much fanfare, and much disappointment. Though promised to start at $40,000 and deliver 300 miles of range, the least expensive version of the truck starts at just over $60,000, and won’t be available until 2025. Until then, reservation holders—of which Tesla claims there are a million—will have to make do with the $80,000 dual-motor version of the truck, or the nearly $100,000 3-motor model.
Don’t expect much in the way of Cybertruck news or sales in the coming year. Tesla is planning a slow ramp-up of the truck. One wonders just how ready the company was to build the trucks at the time of introduction. Also, while the million-ready-buyer claim feels exaggerated, we can be certain that many reservation holders bailed on their place in line when they learned about the pricing.
Also, the Cybertruck has the feel of a vehicle that sells well for a few minutes, then tapers off as its extreme design starts to wear thin. Consider the Chrysler PT Cruiser, for which dealers briefly extracted price premiums from customers. This also happened with the odd convertible/pickup Chevrolet SSR, and, if you’re an automotive historian, the AMC Pacer. It’s possible—even likely—that once we start seeing these things on the road, we’ll stop being startled and simple lose interest in them.
And one gripe: The Cybertruck name feels dated. I hear the word cyber, and I think of turn-of-the-century internet cafes and computer viruses.
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$25,000 Tesla
Codenamed “Redwood,” Tesla today confirmed plans to build a mainstream volume car which could be revealed as early as this year. There’s a good chance that project Redwood is, indeed, the affordable Tesla that Elon Musk has been teasing for years. A couple thoughts:
There is no chance this vehicle, which is likely a small crossover, comes in at $25,000. Firstly, we’ve endured several years of higher-than-average inflation since Musk first floated the idea of a cheap car. Secondly, no Tesla vehicle has ever come in at anywhere near the promised price. We expect the first version of this car to land at around $35,000, with the promise of $30,000 version to arrive later, which will never actually see the light of day.
Also, if Tesla is preparing to make a more-affordable model, that means that the company sees sales of its current models slumping. Carmakers don’t build cheap things if they can sell all the pricey things they can make.
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Updates
On sale since 2017 and 2020 respectively, the popular Tesla Model 3 and Model Y account for most of Tesla’s sales. In fact, the Model Y is—depending on who you ask—the best-selling EV in the world. That said, neither model has been meaningfully updated since being launched.
A Model 3 freshening is on tap for 2024—a firm date has not been announced—and a Model Y update should follow directly. Depending on the success of these updates, Tesla sales could jump meaningfully later in the year. This, of course, is subject to the company holding the line on pricing. It’s possible that Tesla opts to raises prices if demand does improve, this to bolster its thinning margins.
Declining Satisfaction Ratings
Up until now, the Tesla ownership community has been made up largely of fans and loyalists. These owners have been famously tight-lipped about vehicle flaws and defects, painting a rosier picture of the Tesla ownership experience than is likely the case.
But, a recent surge in sales has brought with it more conventional buyers, the kind of buyers who are unlikely to share earlier buyers’ sense of brand allegiance. Expect to see Tesla performance in owner-satisfaction studies to decline—if not plunge—as mainstream buyers more accurately share the details of their ownership experience.
Dealerships
As Tesla becomes a mainstream brand, and courts mainstream buyers, it may well find that building brick-and-mortar dealership and repair facilities becomes necessary. Maybe. Young buyers are not as attached to the dealership concept as much as are older consumers, but may still wonder where they’re going to go for maintenance and service.
I think we’re going to hear about a Tesla plan to flesh out its store presence—at least a little bit—in markets where it sees the most sales potential. Maybe.
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