The South African billionaire took over as head of the Department of Government Efficiency (DOGE), an agency created with the sole aim of cutting spending and reorganizing the federal bureaucracy.
This department closed its doors last November. In May, Musk left the Trump administration after criticizing the Republican budget proposal.
But The problems at Tesla started months ago. More precisely, in the first quarter of the year.
A situation which can be explained by a slowdown in the electric vehicle market, increased competition, as well as operational factors, including the renewal of its reduced range of vehicles.
In 2024, Tesla recorded its first drop in global sales in over a decade. In fact, Elon Musk said at the end of that year that Tesla’s forecast was to increase its sales between 20 and 30 percent.
To put things in context, Tesla accumulates four consecutive years in which it failed to meet its sales forecasts. It did not do so in 2022, nor in 2023, nor even in 2024. And of course, it will not meet its forecasts in 2025 either.
Historical Bonus
All this did not prevent the shareholders of the North American company from deciding to reward its founder and CEO with a record bonus.
In total, Elon Musk will receive a trillion dollars – yes, trillion with a “b” – if he hits a series of goals through 2035.
More precisely, 75% of Tesla shareholders approved the said package of shares. Institutional investors such as Norwegian Bankthe Norwegian sovereign wealth fund.
“While we recognize the significant value generated under Mr. Musk’s visionary leadership, we are concerned about the total bonus amount, shareholding dilution and lack of risk mitigation associated with the CEO figure, consistent with our position on executive compensation,” according to Norges Bank’s explanation of voting guidance.
It is good to remember that Norges Bank Investment Management owns 1.12% stake in Teslawhich is equivalent to 37.27 million shares of the electric car company.
Previously, in June, the Swedish pension fund AP7 sold all shares in the company. However, that fund fled before Musk offered his billion-dollar bonus. And he did it because Musk failed to respect labor rights in the United States.
“Sorpasso” by BYD
The situation is so delicate that Tesla will no longer be the company that sells the most electric vehicles in the world. Its place will be taken by the Chinese BYD.
A situation which can be explained by its continued entry into different markets around the world. In the first nine months of the year, BYD sold 3,260,146 electrified vehicles (electric and plug-in hybrids), which is equivalent to an increase of 18.6% in annual comparison.
Of this amount, 1,605,903 units corresponded to fully electric passenger cars, which represents an increase of 37.1% compared to the same period of the previous year and 49.2% of deliveries.
Tesla, for its part, sold a total of 1,247,902 electric vehicles during the first nine months of the year, which equates to a drop of 3.5% year-on-year.
Problem in Europe
The truth is that Tesla is accumulating problems in the three main vehicle sales regions: the United States, China and especially Europe.
The Old Continent has turned its back on American business. And it’s not something that attracts attention if you take into account the constant noise made by Elon Musk throughout the year.
At the start of the year, and in the middle of the German federal election campaign, Musk asked to vote for the far-right AfD (Alternative for Germany) party.
In fact, the businessman recently said that “the E.U. should be abolished and sovereignty returned to individual countriesso that governments can better represent their citizens.
All this after the European Commission fined X 120 million euros for violating transparency rules and obligations of the Digital Services Regulation.
In Germany, where Tesla has a gigafactory, the company’s sales between January and November accumulated a decline of 48.4% compared to the same period of the previous year, to 17,358 units.
Spain is one of the few EU markets in which the firm’s registrations are increasing. The reason? Tesla maintains a rebate program for certain models and versions starting in July 2024.
This situation allows the company to increase its sales. But It also passes on problems related to loss of residual value to its customers. of their vehicles.
The truth is that the company has an excessively short model range, which hurts it compared to competition that has a wide variety of vehicles.
Between January and November – latest data available – Tesla sales on the Old Continent have accumulated a drop of 28% year-on-year, with a total of 203,382 units sold.
Business transformation
If anyone thought Tesla was going to focus on the auto industry, they were wrong. The company is in an unprecedented transformation process.
“Tesla’s next chapter has the potential to create a world we are only beginning to imagine: reinventing work, transportation and energy, and integrating AI into the physical world through products and services to create a safer, cleaner and better world for everyone,” the company said in a letter sent to shareholders approving Elon Musk’s $1 billion bonus.
Among the objectives, the ambition to achieve a $8.5 trillion market value for Tesla over the next decade. Currently, the company’s capitalization amounts to $1.4 billion.
Not just that. The South African tycoon is also considering production of 20 million vehicles until 2035. To put these numbers into context, since Tesla began production in 2008, it has manufactured 7.9 million units.
This would involve producing 2 million vehicles per year, a figure slightly higher than in recent years. Thus, in 2024, it will have manufactured 1.77 million units.
Another of the objectives to be achieved in exchange for the billion-dollar bonus is the development and massive deployment of fleets of robot taxis and autonomous driving products. In fact, think 10 million active subscriptions to the autonomous driving system.
But there are also other steps related to the commercial deployment of humanoid robots. By 2035, Musk’s goal is to have at least one million units of the Optimus robot operating.
In fact, robots are expected to be the core of Tesla’s business, surpassing the automotive sector’s revenue.
Profits collapse
During the first three quarters of the year, the The company’s profit fell 40.4% year-on-yearreaching 2.954 million dollars (2.515 million euros). The same thing happened with revenues, which decreased by 4.8%, to 69.926 million dollars (59.522 million euros).
The drop in profitability is also explained by increase in operating expensesas well as due to lower revenues from regulatory appropriations.
However, only Elon Musk knows the future of Tesla. We will now have to wait for the company to meet some of its forecasts. If this ever happens.
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