Investors are beginning to raise questions about whether Tesla CEO Elon Musk is the problem for Tesla Inc. after first-quarter delivery numbers fell below expectations in the electric vehicle maker's overall delivery of 386,783 vehicles, which points to issues in some parts at the company being blamed on Musk himself.
A less-than-spectacular Q1 performance-the blame has been laid, from problems with the initial Model 3 production phase to shipping disruptions due to geopolitical tensions and even an arson attack at the Berlin factory-had already raised serious questions as to whether it would be able to meet Wall Street's already lowered earnings estimates. But with Tesla blaming exogenous factors for the miss, attention turns to Musk's deep engagement in other pursuits, including as CEO of X, aka Twitter, and an AI startup, Grok.
Analysts have been stressing that Musk has to emphasize Tesla as the competition in the EV line increases rapidly. To some, Musk is burdening himself with commitments that will distract him from putting full attention towards making Tesla grow. What one analyst termed a "code-red situation." Besides, Musk can be loudmouthed and polarizing on social media platforms like X, and the effect that such behavior might have on perception of the Tesla brand and vehicle sales is in question.
While the decline in Tesla's stock price following the delivery miss reflects investor unease, concerns extend beyond short-term performance. Caliber said Tesla's public opinion rating declined substantially, indicating potential reputational damage attributed, at least partly, to Musk's conduct.
The delivery miss comes amid broader challenges for Tesla, including increased competition and shipping disruptions. Analysts added that Tesla needed to address the underlying issues with customer demand, mainly in the US, where Tesla faces considerable headwinds.
While setbacks are growing, Tesla still seems fixated on innovation, particularly in the self-driving department. At the same time, these ambitious long-term plans probably do not jibe with existing market realities, raising some valuation questions by investors. Tesla is trading at some of the highest earnings multiples ever, raising overvaluation concerns compounded by uncertainties about its growth path.
But while those struggles could provide opportunities for the long-term investor, there are enough uncertainties regarding Musk's leadership and the company's competitive positioning to underpin caution. Investors will be focused on Tesla's ability to regain momentum and stay competitive in a fast-changing EV market as it works its way through this.
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