Promotions, Restylings… Has Tesla Fallen in Line?

Initially a provocateur agent, the American manufacturer has standardized its approach as it grew.

And what if Tesla had hit its prime? As of now, many automakers would give everything they have for Tesla’s commercial health and stock valuation. But others wouldn’t, and the Munich Motor Show this September 2023 is here to remind us. Explanations.

There are two ways to interpret the statements of industry leaders in the automotive sector. On one side, there are the polite ones who applaud Tesla and say they want to draw inspiration from its reinvention. On the other side, there are the pragmatists — led by Carlos Tavares — who have known the market well through 40 years of experience. However, both viewpoints agree on one point: the threat is not Tesla, but “China”.

Back to Tesla. Tavares is not known for mincing words, but his reflections and decisions are always marked by common sense. The turnaround of PSA Group, later merging with FIAT to form the Stellantis empire, saved Europe’s major automotive families — Peugeot and the Agnelli family. The Portuguese CEO likes to remind that 90% of cars still sold in Europe are not electric despite all the hype we experience. And most importantly, the starting price of a Tesla, even discounted and with bonuses, begins at €37,000… whereas most of the market ranges between €18,000 and €35,000. Above this limit, you enter a very high income bracket where volumes (but not margins!) decrease.

Finally, Tesla is not yet established everywhere in the world, and this growth will not be without challenges. Particularly in territories where electric vehicles will not be relevant for decades, such as the African and South American continents. Meanwhile, traditional automakers are taking the time to carefully build their electric offerings.

Tesla started with a head start that it will enjoy for a few more years, both in terms of technology and reputation. But this success could quickly turn against its creator: there are now many Teslas on the roads, and weariness or triviality could threaten the marketing concept that emphasizes differentiation.

Moreover, Tesla faces a huge risk: 50% of its global sales rely on a single model, the SUV Model Y. Once it is no longer trendy or has been displaced by competitors, the house of cards could collapse. And it won’t be saved long-term by Model S, X, or the soon-to-be Cybertruck. The electric pickup may generate buzz and satisfy some eccentric egos (especially in the USA), but it won’t meet the individual mobility challenges of tomorrow.

To maintain its appeal, Tesla, like any other manufacturer it previously mocked, must update its products with facelifts and technological advancements. The Model 3 is the latest example: once a star, it has fallen in sales rankings, mainly due to internet cannibalization by the Model Y. In China, dissatisfaction is rising, raising fears that customers could switch to more competitive offers. Even more so in a sector where technological obsolescence has never been so rapid: the progress is so fast that buying an electric car might make no sense anymore!

And every passing day, competitors catch up and tighten the screw: premium brands regain their loyal customers, and mainstream automakers will be able to offer, like Tesla, cheaper models once they are ready. And without Elon Musk, Tesla’s prominent figure, what would happen? Many questions that foster concern.

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