Tesla’s Elon Musk has advanced his vision as an AI leader. The landmark deal with the Chinese government could get Tesla back on track.
A Big Bet On Autonomous Driving Coupled With A Landmark Deal With The Chinese Government Could Get Tesla Back On Track
On his most recent earnings call this week, Elon Musk initially sounded like a man on the ropes.
The past few months have not been kind to Tesla’s Tesla czar. The company reported a steep drop in sales and shipments in the first quarter. In February, a Delaware judge ruled that Elon had to return $56 billion of stock the board had awarded him. Manufacturing flaws, bottlenecks and mixed reviews have marred the roll-out of Tesla’s Cybertruck. If that wasn’t enough, German leftist eco-terrorists, the “Volcano Group,” incinerated the power source for his Berlin giga factory.
It is arguable that many of Musk’s wounds are self-inflicted and that the distractions of his social media misadventures have led him to neglect his most valuable corporate asset – Tesla – which is also the source of cash for his multiple other ventures. To point to just a few prominent examples of unforced errors:
Tesla has been slow to refresh its product lineup, with the launch of the low-cost, $25,000 Model 2 delayed multiple times and then reported to have been canceled.
His quixotic campaigns against what he calls the “woke-mind virus” have entangled Musk in legal disputes from Brazil to Australia and arguably alienated the generally liberal, environmentally conscious core consumers of EVs.
Tesla, which is on track to receive up to $41 billion in federal subsidies between now and 2032 (including $7,500 per car tax credits on its Model 3 and Y vehicles), has been weirdly antagonistic toward pro-EV policies, of which it is the biggest beneficiary. As an example, Musk joked on the call that Biden’s signature Inflation Reduction Act (IRA) could be confused with the Irish Republican Army or Individual Retirement Account.
Now, we have the odd spectacle of a chief executive whose bottom line depends on government largesse regularly roasting the Biden administration. At the same time, we are witnessing a president who has staked his candidacy on reinvigorating American green technology studiously ignoring the only American EV manufacturer of any accurate scale.The China Doom Loop
Another explanation for Tesla’s wobbles is that the company is cracking under the pressure of overwhelming Chinese competition. The risk is that low-cost, higher-quality EVs will eventually sweep away not just Tesla but the entire United States auto industry as internal combustion engines slowly go the way of the horse buggy.
In a recent blog, Noah Smith opines that Tesla has fallen prey to a familiar cycle. In the scenarios he describes, multinational companies are lured to China with the prospects of huge addressable markets only to have their critical technology taken away through compulsory joint ventures, corporate espionage and acquisitions.
