Things Are Bad At Tesla—They’re About To Get Much Worse

Forbes Breaking News

On "Forbes Newsroom," Alan Ohnsman, Senior Editor at Forbes, discussed the current and possible future states of Elon Musk and Tesla.  READ MORE: https://www.forbes.com/sites/alanohnsman/2025/03/27/things-are-bad-at-tesla-theyre-about-to-get-much-worse/  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript   Stay Connected Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com

Transcript

00:00Elon Musk runs six companies, each valued in excess of $1 billion, and since January

00:06has also spearheaded DOGE, President Trump's efforts to radically downsize the federal

00:10government.

00:11As of March 27th, he is the richest billionaire on Forbes' World's Billionaires list, but

00:16how long can he continue wearing so many hats?

00:22Hi everybody, I'm Brittany Lewis, a breaking news reporter here at Forbes.

00:26Joining me now is my Forbes colleague, Alan Onsman, a senior editor and author of the

00:30current climate newsletter.

00:31Alan, thank you so much for joining me.

00:33Hi, Brittany.

00:34Good to be with you.

00:35Alan, I'm excited to get your insight here today because you are Forbes' expert when

00:39it comes to all things Elon Musk, as well as all things Tesla.

00:43We spoke a few weeks ago in the beginning of March about exactly why Tesla stock took

00:47a nosedive.

00:49Now you're writing that things are bad at Tesla.

00:51They're about to get much worse.

00:53So to start off the conversation about Tesla, I think you can't talk about Tesla without

00:57first talking about Elon Musk, the face behind the company.

01:01Elon Musk is really synonymous with Tesla.

01:04So how many years have you been covering Elon Musk?

01:06And can you talk to us a little bit about his metamorphosis?

01:10Well, I have been covering Elon and Tesla for a very, very long time, since July 2006,

01:17actually, when their very first public event in Santa Monica.

01:22That was the first time I met him.

01:25And to be perfectly honest, I mean, at that first event, it seemed like, wow, this guy's

01:30going to lose a lot of money and this thing is going to not work out.

01:33So 19 years later, we're in a very, very different place, I guess.

01:38And then from 2006 to now in 2025, I mean, Elon Musk is, according to Forbes, the richest

01:46person in the world.

01:48He's also President Trump's essentially right hand man.

01:51And he's spearheading that Doge project.

01:53I mean, what change did you see in him?

01:56Well, I think you just hit the nail on the head there.

01:59I mean, aside from the unbelievable wealth that he's created, Elon Musk was never political,

02:08ever.

02:09I have no memory whatsoever of him having any particular interest in politics beyond

02:15Tesla getting its first low interest government loan in 2010 or 2009 from the Obama administration.

02:23Aside from that, politics just did not come up.

02:26And that is one thing.

02:28I mean, aside from many other changes, he has become very, very political.

02:34And that's a challenge, obviously, because he's so synonymous with the brand as its

02:38biggest shareholder, as its CEO, as its main spokesman.

02:42So as his politics have become very public and very specific, going in one direction,

02:49he does skew right, very supportive of Donald Trump.

02:52He's working for the administration, as you point out, he gave him a couple hundred million

02:56bucks last year for the election.

02:58That's a tricky situation to be in, because generally most CEOs would stay out of the

03:05political realm, especially if they're selling consumer products that they want everyone

03:10to buy.

03:12If you become very political and very specific, you do risk alienating many consumers that

03:18want to get your products and maybe don't share your politics.

03:23And I think that you really outlined that last time we spoke about how exactly and why

03:29Tesla stock took that nosedive.

03:32We saw earlier this month in March, some Teslas on the White House lawn, President Trump talking

03:38in front of the Teslas.

03:39But in 2006, it's interesting.

03:41You said, hey, I thought he was going to lose a lot of money.

03:44That's not the case.

03:45That wasn't the case.

03:46The company blew up.

03:47So talk to us a little bit about the rise of Tesla.

03:50Yeah.

03:51So between that early phase from their showing off the Roadster in 2006 until the Roadster

03:57went on sale in 2008, Tesla looked like it was going to be a fairly low volume company

04:04selling a very expensive product.

04:06And the Roadster was a $100,000, $110,000 product for rich people, basically.

04:13It was an interesting idea and sort of a great test of concept, but it didn't necessarily

04:20indicate where this company was going.

04:23It didn't sell that many units between 2008 and 2010.

04:27I think they did about 2,400 or 2,500 units in total for the Roadster, which wasn't even

04:33really their vehicle because it was a chassis from Lotus and they kind of put it together.

04:39The big change and the real turning point was 2012 when the Model S came out.

04:44And so the Model S was just light years ahead of what the Roadster was.

04:49And that really kind of created a lot of the cachet that Tesla was associated with, with

04:57this very cool, cutting edge, high-tech product that people were calling at the time an iPhone on wheels.

05:04It was seemingly so much more sophisticated than anything we'd seen before from Detroit

05:08and from German automakers and the Japanese and the Koreans and everyone else.

05:12No one had done anything quite like this.

05:14The types of technology that were available with upgradable features, you know, over the

05:20air in terms of the operating system within the car.

05:25Great look, really fast.

05:27It was still pretty expensive.

05:29The Model S's were still pretty pricey in that initial period.

05:33But that really kind of, that was where Tesla planted its flag.

05:37And then the next huge jump came in 2017, 2018 with the release of the Model 3.

05:44At that point, Tesla was moving into more of a mass market.

05:49So the Model 3 was supposed to be a $35,000 car.

05:53It wasn't.

05:54It was more like a $45,000, $50,000 car.

05:56But that was considerably cheaper than the Model S, which was going for $80,000, $90,000, $100,000.

06:04So the real volume begins with the Model 3.

06:06And then end of 2019, they come out with the Model Y crossover.

06:11And that just took Tesla to the next level.

06:14The Model Y has been a terrific seller.

06:18It's the top-selling vehicle in many markets around the world, including in California

06:24and in the U.S. if you stick just to sort of the car market and exclude pickup trucks.

06:29So that's been a huge success.

06:30And really, those two models, the Model 3 and the Model Y, have really built Tesla's

06:36sales volume.

06:37And then finally, there's one more piece that's very critical, which was entering China.

06:43At the end of 2019, Tesla began building vehicles in Shanghai, the first company that

06:51China allowed to wholly own its own auto plant in the country.

06:55No other foreign automaker had been given this privilege.

06:58Prior to that, Ford, General Motors, Toyota, Honda, Volkswagen, everyone had to have a

07:03Chinese partner.

07:05And the Chinese partner owned slightly more.

07:07It was like 50.1% of the venture.

07:10You own 49.9%.

07:11Tesla, 100% ownership of their Shanghai plant, extraordinary.

07:16And the reason that's important is not simply that they have a plant in China, but it's

07:20everything that opens up for them.

07:23China is by far the world's biggest auto market, but more importantly, it's the world's biggest

07:27EV market by a ton.

07:30It is exponentially larger than any other market in terms of how many EVs sell there.

07:35And the other piece for Tesla is having that plant in Shanghai gives it access to lower

07:41cost labor, lower cost parts, lower cost materials, cheaper battery cells, and better logistics,

07:48being able to move parts and vehicles around the country quickly.

07:53And that really changed everything for the company because beginning in 2020, Tesla now

07:58becomes the most profitable automaker in the world.

08:03It's nowhere near the largest in terms of total volume.

08:07But because of China, China was really the key to Tesla becoming a money machine.

08:14And it has stayed consistently in the black since 2020.

08:18And that's a big difference because it went public in 2010.

08:23From 2010 through all of 2019, Tesla was not consistently profitable on an annual basis.

08:29Never.

08:30But in 2020, suddenly in China, everything changes and they're making buckets of money.

08:35I think it's really interesting when you think about Tesla, maybe 10, 15 years ago, I mean,

08:40there really wasn't anything comparable to it.

08:42As you said, it's cutting edge.

08:43It's essentially an iPhone on wheels.

08:47But now as you write in your piece, things are bad at Tesla getting worse.

08:51You're talking about some competitors in this piece as well.

08:53So when did you start seeing these viable competitors pop up onto the scene?

08:58That's really been taking shape over the last couple of years.

09:02Tesla's had a lot of competition from different companies in different markets for a while.

09:06Back in 2010, Nissan looked like it was going to be a giant in electric vehicles with the

09:11Nissan Leaf.

09:12But when the product actually arrived, it didn't live up to the expectations.

09:17It didn't sell that well.

09:18So it never became a serious competitor.

09:20Over the years in the U.S. market, probably not until General Motors came out with the

09:25Bolt about six years ago, did any automaker in the U.S. market have a price competitive

09:35product that could kind of like take some sales away from Tesla.

09:40But the Bolt never sold in the huge numbers that Model 3 or Model Y did.

09:47Where things really begin to get interesting is in China, because China, the government,

09:52has prioritized for over the last 10 or 15 years, electrification.

09:57And the reason for this is very simple.

10:00If you are a country that wants to dominate in a particular industry space, you look around

10:06and you say, well, you know, the Germans and the Americans have been making internal combustion

10:10engines for over a century.

10:12They're really, really good at it.

10:14Are we going to be able to match what they're doing in that technology?

10:17No.

10:18Let's just skip it.

10:19Let's go to the next thing, because they see Tesla, what Tesla is doing.

10:25And this was another reason why it suggested the Chinese government allowed Tesla to come

10:28into the market and gave it full access.

10:31They wanted local Chinese automakers to observe and study what Tesla was doing.

10:37And boy, did they ever, because you have begun to see, there have always been tons of automakers

10:44in China, but most of them did not have particularly impressive product until a few years ago.

10:49Now, there has been this spectacular rise in the capabilities of domestic Chinese automakers,

10:56starting with BYD, which is quickly just turning into a giant.

11:00BYD is the world's second largest battery maker.

11:04It is the biggest automaker in China now.

11:07And unlike Tesla, it does some different things.

11:10It doesn't just do EVs.

11:11It does plug in hybrids, which have a small gasoline engine, which have proved very popular

11:17in the Chinese market, especially in places where charging infrastructure isn't that great.

11:21But BYD has just been crushing it in terms of their sales volume.

11:27Tesla's Model Y last year was still the top selling electric vehicle in China.

11:33However, cumulative sales for all of the BYD EVs are far greater because it has many, many

11:39more models.

11:40And the killer is they cost about half as much.

11:43They are so much more affordable.

11:46You can get a base model electric vehicle from BYD, a small hatchback, for about $10,000

11:53or $11,000.

11:54I mean, there's just nothing like that in the U.S.

11:57And if you're willing to pay $25,000, $30,000, $40,000, that gets you a very nice vehicle

12:03in the Chinese market.

12:04So their ability to compete on price is tough.

12:09And it's not just BYD.

12:10There are companies like Xiaomi from the consumer electronics firm that's been growing very

12:15rapidly.

12:16Geely, which has been around for a while.

12:19Zeker, which is a new brand started by Geely.

12:22NIO, which started up just a few years ago, but has very compelling higher end EVs.

12:28The list just goes on and on and on.

12:30And of course, you also have CATL, which is a battery maker.

12:34And CATL, just like BYD, is also a Tesla supplier of batteries in the Chinese market.

12:40CATL has become the world's largest battery maker.

12:44And its technology appears to be running well ahead of Tesla's.

12:49So in terms of products, simply in terms of electric cars, who makes good electric cars?

12:54The Chinese right now are at the absolute cutting edge.

12:58For a long time, China was known as a knockoff market where foreign products were just copied.

13:03That is not the case anymore.

13:05They are doing completely original, very exciting new products.

13:11Their quality keeps improving.

13:13But the level of technology and what you get for the money, no one can really compete with

13:18that right now.

13:19And especially Tesla.

13:20Alan, if I'm a Tesla shareholder listening to you right now, I'm pretty concerned.

13:25And here's why I'm concerned.

13:27Tesla's facing some global problems.

13:29At the beginning of this conversation, you said Tesla was cutting edge.

13:32Now you're talking about a serious Chinese competitor calling their product cutting edge.

13:37Also the face of Tesla, Elon Musk, is synonymous with Tesla.

13:43He's also with Donald Trump, working with Donald Trump, working with that administration

13:47hand in hand.

13:48Trump, as we know, is a polarizing figure, not only in this country, but around the world.

13:53And Elon Musk has worse approval ratings in some polls than Donald Trump.

13:58So talk to us about all of these challenges Tesla faces.

14:01And is it more of a branding problem like Elon Musk, or is it more of a product problem?

14:07It's both.

14:08And that's not good for a company, you don't want to hear that for a company.

14:13In China, Elon Musk is personally very popular.

14:16He's still very popular.

14:18They don't care about his politics.

14:19It just doesn't, it doesn't rate.

14:21They like him as an exciting entrepreneur.

14:24That story is very compelling in China.

14:27The problem in China is much more fundamental.

14:30It's competition.

14:31It's that the domestic manufacturers are getting so good so fast.

14:37And that's a big problem there.

14:41To the other, you know, pivoting to the other issue, you're exactly right.

14:44The controversy over his relationship with Trump and some of his public statements and

14:49behavior that is creating real headaches for him.

14:52Certainly here in California, where I am, across the U.S., but also in Europe, those,

14:57you know, the North American market and Europe are really turning hard against Tesla.

15:03We're seeing just terrible numbers in the first quarter, down over 40% in the first

15:08two months of the year in the EU.

15:10We don't know U.S. numbers yet, but it is expected that Tesla is going to be down double

15:15digit in the United States, certainly in the first quarter.

15:18The early indications in California, which has been Tesla's home market since its beginning,

15:23has nurtured this company, has been the most reliable, loyal market, is turning hard.

15:30It was down.

15:31The only month we really have a look at is January.

15:35Sales were down over 30% in the state of California.

15:38But the overall EV market was up for everybody else.

15:41So they were, you know, they were the only company that was down.

15:44That's likely to be the case across the U.S. this year.

15:47And the reason for that is very simple.

15:49If you talk to people that study demographic patterns, who buys electric vehicles, who

15:55are the core buyer base, it's really not surprising to discover that most, not all, but over half

16:02of EV buyers tend to self-identify as Democrat or more or more liberal leaning.

16:09As a result, if you are taking very hard right positions publicly and moving and associating

16:17your brand with right-wing politics, that's not going to attract a lot of people who have

16:24been your core buyers.

16:25And thus far, you mentioned earlier, Donald Trump had a promotional event at the White

16:30House saying, I'm going to buy a Tesla, and Sean Hannity at Fox News said, I'm going to

16:34buy a Tesla.

16:35OK, they can do that.

16:38Elon Musk's favorability with Republicans and Trump supporters is rising.

16:45The same people, however, are not necessarily buying Teslas.

16:49And that's the challenge right now.

16:51The politicization of the brand is an unwise move, again, if you want to keep sales growing.

16:59So that's kind of where the company finds itself right now, these two different buckets

17:02of problems.

17:03In China, it's a pure competitive issue.

17:06Outside of China, it's all of the other stuff with the image and the blowback to Doge and

17:13to Trump for many consumers.

17:16Elon Musk then sounds like a headache for Tesla.

17:19So what's the option here?

17:20Because he's the face of Doge.

17:22He's also running other companies.

17:24Would it behoove Tesla to remove him as CEO?

17:28But he is also the brains of the operation.

17:30I mean, what does that look like?

17:32And I mean, there's also a question of there's only 24 hours in a day.

17:35Is he even running Tesla?

17:38Objectively, no.

17:40I mean, at best, he's a part-time CEO.

17:42I mean, there's just no getting around that.

17:44It is not possible for anyone to do what he's doing.

17:50And it's six companies, ostensibly, that he leads separate from his Doge responsibilities.

17:57Getting back to this other issue of China, the competitive challenge, well, if you have

18:02a distracted CEO that hasn't been focusing, laser-focused on future products and the things

18:07you need to do to grow the business, if you're not paying attention to that, you shouldn't

18:15be surprised if problems begin to develop.

18:17And it does feel, in many ways, that he's giving away this first-mover status that Tesla

18:24has enjoyed as the preeminent electric vehicle maker for a decade.

18:29BYD will certainly pass Tesla in global electric vehicle sales this year.

18:35There's just no question about it.

18:37BYD is already bigger than Tesla in terms of total sales volume and revenue.

18:41It passed Tesla in revenue for the first time last year.

18:45But BYD's total sales also, as mentioned earlier, include things like plug-in hybrids and some

18:49other types of vehicles that Tesla doesn't do.

18:51If you pull those away and just say battery-only cars, BYD will be far larger than Tesla.

18:58Its volume could be maybe close to double what Tesla does this year.

19:04Investors right now are downgrading their estimates for Tesla's sales volume.

19:09It had its first annual decline in 2024.

19:13Right now, the expectation is it will have another one in 2025.

19:17And a key reason for that, separate from how people feel about Elon and his politics and

19:23these things like that, is the product line is getting kind of stale.

19:26The Model 3 came out in 2017.

19:30The Model Y came out at the end of 2019.

19:33The Cybertruck came out in 2023, but the Cybertruck is too expensive.

19:37It's too niche.

19:38That's not a volume vehicle.

19:39It's not a mass market product.

19:41And it's been somewhat controversial.

19:43Tesla has failed to kind of fill out the product line.

19:45And again, that can go back to a CEO who's not paying attention.

19:50And you know, I don't know what the easy fix for that is in the near term.

19:55President Trump said he's slapping vehicles that are imported, as well as some imported

20:01auto parts with a 25 percent tariff.

20:03If you're Tesla, what are you thinking about that news?

20:06Is that helping you?

20:07Is that hurting you?

20:08What does that look like?

20:09Well, there are some people that say that Tesla is a winner in this because it's so

20:14heavily concentrated with its manufacturing base in the United States.

20:17I mean, it doesn't export from China to the U.S.

20:21It builds products in California and Texas and plants for the U.S. market.

20:26So on that level, it's fine.

20:28And Tesla has vertically integrated many of its manufacturing operations.

20:32However, the tariffs aren't just for 25 percent on imported vehicles.

20:38It does cover, as you mentioned, auto parts.

20:40But then there are also new tariffs that have been imposed on steel, on aluminum, things

20:45like that.

20:46Well, Tesla, you know, has to import, like every other automaker, a lot of electronics

20:52and components and steel and aluminum.

20:54So it doesn't escape the tariffs.

20:57It may be hurt somewhat less since it's not importing vehicles.

21:00You know, Toyota brings in a lot of vehicles from Japan.

21:02Korea brings in vehicles from South Korea.

21:05The Germans bring in a lot of vehicles from Germany.

21:08So they will feel more pain than Tesla will.

21:10That's for sure.

21:11But will Tesla be unscathed by the tariffs?

21:14No.

21:15And the reason we know this is recently a group of, well, Tesla sent an unsigned letter

21:21to the U.S. trade representative basically pleading not to impose tariffs.

21:26It wasn't signed, which was interesting, because perhaps the executives who put that

21:30together don't want to feel the wrath of Elon Musk.

21:34But, you know, company executives made it very clear that they will feel pain from these

21:41tariffs.

21:42So, you know, Tesla may be a little bit less hurt in the near term, but they will be hurt

21:48by the tariffs.

21:50Every automaker is going to get tagged, unfortunately.

21:54For your piece for Forbes, you really highlight, and the title is, things are bad at Tesla.

21:58They're about to get much worse.

22:00I know you don't have a crystal ball, Alan.

22:02But let's say I know you've covered Tesla now for almost two decades.

22:06You are, if you had to take a guess here at how Tesla will rank in the EV market in, let's

22:13say, five years, based on all your reporting, based on this metamorphosis you've seen in

22:17both Elon Musk and the company, I mean, what does the company look like in a few years

22:21from now?

22:22That's, you know, that is a terrific question and it is hard to tell.

22:27There is no indication that Tesla's board is going to intervene and do anything in terms

22:33of change of management.

22:34And the other issue is Tesla has a very unusually small C-suite set of executives.

22:44There's Elon, and then there's a big gap, and then it goes down to a single senior vice

22:49president.

22:50There's no COO.

22:51There's no president.

22:52There's no EVPs.

22:53And what that means is that, you know, Elon retains all control.

22:59Every big decisions have to go through him.

23:00There are no functional, there's no functional COO.

23:03There's no, and so right now what that means is things like losing a competitive edge in

23:10China, for example.

23:12They're not addressing that.

23:13No one is like taking the lead on that.

23:15What's Tesla's killer plan to regain growth in China?

23:19There's no indication that there is one.

23:23So what does that mean?

23:24That means if Tesla's volumes keep shrinking, their sales volumes go down, their margins

23:29get worse, their sales in China go down, their margins get a lot worse.

23:34Well, that puts the company in a very awkward position.

23:36It no longer has this halo that it's enjoyed.

23:39It gets the Elon Musk premium for many years because he did remarkable things in the company's,

23:46you know, formative years, its first decade and a half.

23:50So it is, you know, it trades much higher than any other automotive stock in the world

23:55by a lot.

23:56And a lot of that is the Elon premium.

23:58If things continue on the path they're on right now, the future does not look bright

24:03at all.

24:04And it's all of these things.

24:06It's the perception of the brand.

24:07It's the competitive challenges that it faces.

24:10Those have to be dealt with and there's no indication that that's happening.

24:14So again, barring no change over the next couple of years, it's not a happy future

24:20for Tesla.

24:22And the issue is all of this is fixable.

24:24I mean, it's really not.

24:26These aren't unsolvable problems, but we're not seeing a solution, any signs of a solution.

24:32I don't think Elon will step away and I don't think the board will remove him.

24:37And even if they try to put in like a more of a management structure, if you're the

24:45CEO or the president, you know, everything is going to have to still be signed off by

24:49Elon.

24:50So he has so disproportionate amount of influence in the direction of the company.

24:54So that makes things very, very difficult.

24:56I do know for sure that five years from now, BYD, Xiaomi, NIO, Geely, all these companies

25:04are going to be so much bigger.

25:05And the reason I know that is it's already happening.

25:08They're not here.

25:09We block them in the United States because of tariffs.

25:11But they're booming in Latin America.

25:13They're booming in Australia.

25:15They're booming in Europe.

25:16They're entering all of these other markets.

25:18So it's already happening.

25:22And as you watch this unfold, that's why the piece is saying, you know, it's about to get

25:26worse because there are these very serious problems that are not being addressed.

25:32And so, again, the only prediction I would make is if nothing changes, the future is

25:37not not a bright one.

25:40Well, Alan, I really appreciate your reporting here.

25:43I appreciate your expertise and your insight.

25:46And I know there are plenty of more conversations to have about Elon Musk, to have about Tesla.

25:51And I hope we have them soon.

25:52Thank you so much for joining me.

25:54Thanks, Brittany.

25:55Fun to be with you.

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