New York Times: Tesla Strategy ‘Swerves’ as Doubters Increase

The New York Times recently published an article about the doubts surrounding Tesla as the company shutters its retail stores.

In an article titled “Tesla Swerves on Strategy, Trailed by Growing Doubts,” the New York Times outlines the series of issues affecting Elon Musk’s electric car manufacturer Tesla. Breitbart News has reported on the company as it paid a $920 million debt bond in cash, announced plans to shutter stores across the country, revealed a $35,000 Model 3 vehicle, and a new Model Y SUV.

The New York Times gives a brief overview of Tesla’s troubles writing:

Tesla’s sleek stores embodied its green vision for upending the transportation and energy business: a one-stop shop for electric cars, solar panels and battery storage. Less than three months ago, the company announced 11 new store locations across the country.

Now Tesla is in retreat, shuttering most of its stores in a bid to cut costs. The move signaled the broader vulnerabilities of an upstart that for a time was the most highly valued American car company.

A spate of price cuts in the United States points to a slowdown in sales, and the company says it is currently making cars for Europe and China only. But plans to bring the company’s mass-market car, the Model 3, to overseas buyers have been hamstrung by logistical challenges.

A long-promised $35,000 version of the Model 3 is finally being offered, but the price will test the company’s profitability. Tesla now expects a loss in the first quarter, rattling investors’ faith in the company and its enigmatic founder, Elon Musk. In recent days, its shares have tumbled more than 13 percent.

The Times notes that like many Silicon Valley companies, Tesla aimed to “disrupt” the auto industry, but had issues getting even the basics of car manufacturing correct:

At Tesla, Mr. Musk wanted to transform car manufacturing with a highly automated production process. But the company has struggled to master the basics.

Production lines sputtered when Mr. Musk pushed to churn out a few thousand cars a week — something established automakers do in a day. Tesla sent customers $70,000 cars with dings, scratches and malfunctioning screens. Some owners needing repairs were told to wait weeks or months for an appointment.

Recently, the financial stress on the company has become more evident. It laid off 7 percent of its work force in January, the second job cut in the last eight months. And the company had to use up a quarter of its available cash last week to make a $920 million payment to bondholders, giving it less of a cushion to expand or absorb losses.

The Times states that many experts believe that Tesla’s shift to online sales only may not be a smart move for the company:

“Similar to our approach to selling vehicles, we are also shifting sales of our energy and solar products worldwide to online only,” Tesla said in a statement. It said the model would allow customers to save thousands of dollars.

But Allison Mond, a senior analyst at Wood Mackenzie, which tracks and supplies solar data for the Solar Energy Industries Association, said the move was likely to be counterproductive. “Online historically is not a very popular way to sell solar,” she said. “It really has not been proven.”

SolarCity, the predecessor to Tesla’s solar business, once controlled two-thirds of the residential market. By the end of last year under Tesla’s control, that share was under 10 percent. The latest move, Ms. Mond said, “just adds to the story that, I think, Tesla does not care about their residential solar business.”

Many Tesla customers say they have purchased cars online with no problems. For trade-ins, they were able to upload photos and get a quote back without going to a showroom for appraisal. But many still balk at buying an automobile — the second most expensive consumer purchase after a home — without seeing it first

Read the full article in the New York Times here.