Tesla’s end game: Stalingrad, Vietnam, Afghanistan and Ukraine
Poor Elon, another hopeless war is about to come to an end
The cat with nine lives has finally reached its limit, and the game is up. Elon is now caught in a dead-end alley and I believe Tesla is about to end up like the Zebra in this wonderful video -- metaphorically, of course:
The joint effect from the competition of 100+ Chinese automakers, plus all the regular established automakers, plus his own self-inflicted mistakes, now means that Tesla’s end-game may actually happen rather quickly. Usually Tesla’s price cuts happen 3 days AFTER the earnings report, so as to not detract from the pre-slump pump on the earnings call, but now they happened 3 days BEFORE the earnings report. Imagine how bad things must be for Tesla to press this surrender button at this particular moment!
Musk’s stubbornness to roll the dice one more time, after Tesla’s nine lives were up, reminds me of politicians who continue to double down on failed policies and strategies. From Stalingrad in 1942 to Vietnam to Afghanistan to all the other hopelessly failed adventures, Tesla is now caught in a quagmire with no survivable way out. Elon Musk will soon meet the same fate as General Paulus, General Westmoreland et al -- or a Zebra crossing The Nile filled with hungry crocodiles -- metaphorically, of course.
Tesla’s initial 2012-2014 glory
There was a time when Musk had outwitted the automotive industry. That time was 2012-2014. The Model S was a revolutionary car in many ways, with the combination of 250 miles of range, fast and roomy for people, great software, the Supercharging network, as well as that giant hatchback trunkspace in which the average venture capitalist on Sand Hill Road could fit his bicycle, which made him brag about it all evening long at the Rosewood Hotel Bar.
2014: Competition baked in
By the Fall of 2014 It became obvious to my eyes that the automotive industry had made a decision to develop competitive BEVs. They were going to be available in 2018, and some of them made the plan (Jaguar iPace). Chevrolet Bolt was actually the first, in 2016-2017, but others were late to varying degrees (Audi eTron in 2019).
This was the moment when the crocodile had seen the zebra and was planning his attack, swimming forward against the target. The zebra was trying to move away from the crocodile, but the end result was not in doubt.
Tesla stumbled forward until 2023
The European mandate kicked in 2020 and Tesla’s market share gains in BEVs stopped, and started falling. Still, with BEVs overall growing fast, Tesla masked the problem and continued to grow for another couple of years.
China: 100 additional crocs show up
By the end of 2022, the game was up. It was no longer possible to increase unit sales without price cuts. When the price cuts started in early January 2023, it was the moment when the crocodile first bit into the zebra. Now it was only a matter of time for the end game to play itself out. I believe we are now roughly half-way through this final phase of corporate annihilation. Tesla stock is down approximately 63% from its peak in early November 2021, yet the most painful part may be the final decline from the remaining 37% down to (almost) zero.
Tesla fell victim to one of the classic blunders of history: Never get involved in the automotive industry thinking you can be awarded an outsized valuation forever making mass-market cars:
Maybe The US Congress should have included Tesla in its Ukraine boondoggle bailout: One hopeless enterprise stuck inside another. The final outcome is not in doubt, only the details of the end game remain.
Former Reagan OMB Director David Stockman explains: