It's time for Tesla to grow, which worries investors

Indeed, Tesla had a very difficult week. Its stock plunged nearly 11% at the announcement of more than 30% drop in vehicle deliveries in Q1 2019 (it has slightly recovered but remains well below the opening price of the week ). Even though deliveries have more than doubled compared to the previous year and the first quarter has always been marked by a decline in the entire sector – GM, Fiat Chrysler and Ford have respectively suffered a drop of 7%, 3% and 1.6% – this drastic reduction was frightened. investors.

These worrying numbers only exacerbate the months-old concern that Tesla is at the heart of a massive transition that could determine the builder's future. Rather than stretching short distances to achieve the goals it needed, the electric car manufacturer is trying to become a leader in the sustainable sector.

It's a very different task to do things fast and break things.

The word investors and analysts tend to return to when talking about Tesla is: request. But they are not really talk about the request. They talk about Tesla's ability to draw from it. In other words, they talk about Tesla's management skills.

In this context, there are two ways to increase demand: opening new markets or lowering prices. These new figures are about investors, because they indicate that Tesla is struggling to do both. Almost all articles on the subject indicate that Tesla has a hard time physically delivering vehicles to buyers, mainly Model 3, as it only produces them in a California plant. This poses obvious but important logistical problems when you try to send more vehicles to Europe and China.

Tesla plans to build a Gigafactory for battery manufacturing in Shanghai. In the very near term, this will not solve anything, but it will take a lot of borrowing to finance, which will put additional financial pressure on the company, as it sells more and more low-margin models 3 to high-margin models and high margin models. .

Regarding the price issue, Musk himself admitted that it was "incredibly difficult" to get Model 3 down to $ 35,000, a magic figure he largely invented and attempted to realize via an army of robots under a tent before finally admitting that humans are underestimated. But few people buy a model 3 at the lowest price, because it gives you the least possible range, without autopilot or with a color other than black.

In itself, the sale of $ 8,000 of software complements, corresponding to the total cost of the autopilot package, is a major asset for a company, since the cost of each additional autopilot sale is functionally $ 0. The problem is whether this price eliminates the model 3 of the market you are trying to hit or if the company actually loses money on the sale of the car if the customer does not buy it, as some analysts have valued.

These concerns are exacerbated by the fact that the corporation has exhausted the $ 7,500 federal tax credits for purchases of electric vehicles.

In a somewhat revealing interaction in January during a call from investors, Musk seemed to interpret all of these demand-side issues as requests to determine whether people really appreciate Tesla cars. He explained the problem thus, courtesy of The Verge:

"The demand for Model 3 is incredibly high. The inhibitor is affordability, he said. "It's like people literally did not have the money to buy the car. It has nothing to do with desire. They simply do not have enough money on their bank account. If the car can be made more affordable, they will … the demand is extraordinary. "

It's odd that the CEO of a big car company is trying – and sort of failing? – to explain the economic concept of demand to investors as they bored high school students.

Along with his management style and apparent paranoia, this raises the question of whether Musk is the right person to lead Tesla into his next, more mature phase, less focused on culturing a personality cult than on the management of a strong multinational. .

Investors, like most humans, have a way of saying things without saying it. In this case, "demand" means expanding the market, which for Tesla now means less construction of new or different cars. They are already some of the most elegant, technologically advanced and attractive products. market – but do all the little things that mean that it can offer them at a lower and lower price for a growing part of the globe.

These are not problems that are solved by shouting at people, firing people at random, or chasing whistleblowers, as many management features that Musk has been repeatedly accused of living. These are certainly not problems that can be solved by suddenly announcing that you close all your retail outlets to go back a few days later, justifying both decisions on the basis of dubious statistics.