Elon Musk has been one of the great unicorn-entrepreneurs of the last 30 years, and his greatest success has been Tesla.
Tesla’s success has attracted the entire industry, and a whole bunch of newcomers, to the electric vehicle (EV)industry – all of whom are targeting Tesla. Is this the beginning of the end of growth for Tesla?
There are many signs that Tesla may be peaking.
The $7,500 tax credit that Musk used to build Tesla is not available to him anymore since it can only be used by companies that have not yet sold 200,000 EVs. But this tax credit is available to his competitors. His competitors, like Ford, can sell mid-priced vehicles at a substantial discount and potentially takeover the low-mid end. Musk may be angry and will try to change this law, but will he succeed?
Tesla is being pushed to the upper end of the auto market with the entry of the other auto makers who may be better at competing at lower prices and with the above tax break. Instead of competing with them for dominance of the vast middle-market, which is what many companies that want to dominate do when the market gets more competitive, Tesla seems to be seeking shelter at the upper end.
However traditional luxury car companies are also entering the higher end of the market. With increasingly sophisticated competition at the upper end, does Tesla have the resources and does Musk have the focus to succeed?
China is a huge market for Tesla and a manufacturing hub. But China has strong EV makers and is seeking global dominance in the emerging EV industry. When Tesla is no longer useful to the Chinese, will Tesla still benefit from the relationship?
Tesla has not entered the Indian market yet but has indicated interest in doing so. Now it wants to import cars into India from China. Is Musk tone-deaf about geopolitical tensions or does he think he can bully India?
Musk has started showing his political stripes at the risk of losing potential customers. Is this a smart move? Time will tell.
One sign of a peak is when insiders, in this case Musk, start to sell a portion of their shares. Is Musk exiting a sinking ship?
Will the issues with Twitter be another distraction?
Can Tesla keep its torrid growth rate even with a reduced market share in a smaller segment at the top end by relying on the growth of the EV industry? The odds are not favorable. But Musk is no ordinary entrepreneur.
MY TAKE: Unicorn-entrepreneurs like Musk are incredibly talented. But success often changes them. My experience has been that the ones who stay on top for decades are those who grow with the company. And stay focused on the company.