Tesla Had A Turbulent H1 2024, What Can We Expect In H2 2024?
Tesla had a spectacularly turbulent first half of 2024. How would it navigate the second half? Is the company’s collection of mishaps a prelude to the end of what was deemed a science fiction concept?
Beginning with January this year, Tesla lost its position as the world’s best selling Electric Vehicle (EV) to China’s BYD. It delivered a record 484,507 cars in Q3 2023, a 20% rise on the same period a year earlier. However, it was beaten for the first time by BYD, which on New Year’s Day revealed deliveries of 526,409 for the same period.
Tesla has been the world’s biggest electric vehicle manufacturer since 2015 when sales of its high-powered cars overtook the Nissan Leaf. However, China has since become the world’s biggest market for battery-powered cars and domestic giants such as BYD have invested heavily in producing affordable vehicles.
BYD, which has pledged to “demolish” Western incumbents, has recently expanded beyond China by selling cars in the UK and Europe. It is backed by Warren Buffett’s investment vehicle, Berkshire Hathaway. The company had already overtaken Tesla in total sales, which include plug-in hybrid cars.
Tesla’s delivery numbers last year were only slightly higher than market expectations of around 483,200 cars. In totality, the company sold 1.8m cars. This was up 38% on 2022, and more than BYD’s 1.6m, but fell short of Mr Musk’s target of 2m sales. Tesla has embarked on a price war to boost sales as rising interest rates increase financing costs and tighter rules around US subsidies threaten to make electric cars less affordable.
In February, Tesla recalled more than 2 million vehicles due to a brake system warning light issue. The recall says the warning light indicator letter font size was not in compliance with size height requirements, making it difficult for a driver to detect when illuminated, according to the National Highway Traffic Safety Administration.
The issue was discovered during a routine compliance audit involving a 2023 Tesla Model Y. Following the discovery, the NHTSA notified Tesla about the vehicle not complying with letter font size height requirements.
The recall impacted 2,193,869 vehicles and included 2012-2023 Model S, 2016-2024 Model X, 2017-2023 Model 3, 2019-2024 Model Y and 2024 Tesla Cybertruck vehicles. Tesla began deploying an over-the-air software release in late January to affected vehicles.
That update will increase the letter font size of the Brake, Park and Antilock Brake System (ABS). Remaining vehicles are expected to receive the over-the-air update. Adding insult to injury, Tesla further recalled nearly 200,000 vehicles over concerns with the rearview camera sensing system.
In April 2024, Tesla has settled a lawsuit over a 2018 car crash that killed an Apple engineer after his Model X, operating on Autopilot, swerved off a highway near San Francisco, court documents showed on 8 April 2024 according to Reuters. The settlement was made on the eve of the trial over the high-profile accident involving Tesla’s driver assistant technology.
Tesla faces a series of lawsuits over crashes related to the alleged use of Autopilot, putting the automaker at risk of large monetary judgments and reputational damage. The settlement, whose terms were not disclosed, came as Chief Executive Elon Musk makes major promotions of self-driving technology, touted as key to the financial future of the world’s most valuable automaker.
The 2018 accident killed 38-year-old Walter Huang. His family had alleged that Autopilot steered his 2017 Model X into a highway barrier. Lawyers for Huang’s family had also raised questions about whether Tesla understood that drivers likely would not or could not use the system as directed, and over what steps the automaker took to protect them.
Tesla contended that Huang misused the Autopilot system because he was playing a video game just before the accident. The crash is among hundreds of U.S. accidents in which Autopilot was a suspected factor in reports to auto safety regulators.
The U.S. National Highway Traffic Safety Administration reportedly examined at least 956 crashes in which Autopilot was initially reported to have been in use. The agency separately launched more than 40 investigations into accidents involving Tesla automated-driving systems that resulted in 23 deaths. However, Evangelos Simoudis, investor, author and corporate adviser, said:
“Companies are realising that attaining level 4 of autonomous driving is way more difficult and expensive than the industry predicted.”
Level 4 autonomous driving refers to the vehicle moving automatically in longitudinal and lateral axes and the driver does not have to keep their eyes on the road or supervise the vehicle.
Shortly after, Tesla slashed more than 10% of its global workforce, as it grapples with falling sales and an intensifying price war for electric vehicles (EVs), plus reputational damage from crashes. Two senior leaders, Battery Development Chief Drew Baglino and Vice President for public policy Rohan Patel, also announced their departures, drawing posts of thanks from Musk although some investors were concerned. Baglino had served as Senior Vice President of Tesla’s powertrain and energy engineering team since 2019.
Despite that, Musk remained stubbornly committed to self-driving technology. He said Tesla will unveil its robotaxis on 8 August 2024, after Reuters reported Tesla had scrapped its inexpensive, mass-market car in favour of robotaxis. Tesla subsequently cut the U.S. monthly subscription price for the feature from US$199 to US$99.
Collectively, Tesla suffered a massive profit decline in the first three months of the year to US$1.13 billion (£910 million), compared with US$2.51 billion in 2023. This catalysed another drastic move 3 — Elon Musk fired his Tesla’s Supercharger division, in the name of “needing to be hardcore in cutting costs”.
Fred Lambert, Editor-In-Chief of electric vehicle news website Electrek, posted on social media he was “extremely perplexed” by the move.
“If one thing was a clear success at Tesla, it’s the Supercharger network. Even from a talent perspective. No other charging team in the world has been able to do what Tesla did,” he wrote.
The quality and reach of the Supercharger network has long been a huge advantage for Tesla, James Attwood, acting magazine editor of Autocar, told the BBC. It was “a key selling point for potential buyers” he added.
“But with regulators in both Europe and the US pushing the firm to open the Supercharger network to owners of other electric vehicles, it will offer less of an advantage in the future.”
For Musk, who has established the standards for EV charging, such a cut is probably minute to him — akin to a small sacrifice compared to more losses if Tesla continues to lose its charm to other affordable rivals. The biggest blow would be Tesla being compelled to open up his charging network to other EVs, and why would he? It was his funding that materialised this network which reached “industry-leading” status.
The latest is about Tesla’s recalling more than 125,000 vehicles due to a seat belt warning system malfunction in May, accordingly to IoT World Today. The National Highway Traffic Safety Administration said the seat belt warning system could fail to alert passengers of an unbelted seatbelt, increasing the risk of injury in the event of a crash.
“In the event of an unbelted driver, the seat belt warning light and audible chime may not activate as intended,” the recall stated. “As such, these vehicles fail to comply with the requirements of Federal Motor Vehicle Safety Standard number 208, ‘Occupant Crash Protection.’”
The recall impacts 125,227 vehicles and includes 2017-2023 Model 3, 2012-2024 Model S, 2015-2024 Model X and 2020-2023 Model Y vehicles. Tesla said it will be deploying an over-the-air software update, with owner notification letters mailing by 27 July 2024.
Navigating the second half of 2024 will be a critical juncture for Tesla, as the company strives to regain its footing amid numerous challenges. While the competition from BYD and other rivals intensifies, Tesla must address its quality control issues and regulatory hurdles to restore consumer confidence and maintain its market position.
The resolution of its legal troubles and enhancement of autonomous driving technology will be pivotal in this period. Additionally, strategic pricing and innovative product launches, such as the anticipated robotaxis, could help Tesla pivot towards new growth avenues. With Elon Musk’s unwavering commitment to innovation, Tesla’s trajectory will depend on its ability to adapt, innovate, and sustain its pioneering spirit in the evolving EV landscape.
H2 2024 will thus be a testament to whether Tesla can turn its turbulent start into a robust comeback or if it will face further setbacks in its quest to revolutionize the automotive industry.
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