Why is Tesla stumbling?

More competition, confusion about the future and a giant pay package for Elon Musk

trailer hauling loads of black Teslas
Not exactly business as usual at Tesla
(Image credit: Bloomberg / Getty Images)

Tough times have arrived at Tesla. The car company led by billionaire Elon Musk "is planning to lay off about a tenth of its workforce," The Associated Press said, following a year of falling sales and rising competition from rivals like China's BYD. Tesla responded to the tighter market by cutting prices for some models by as much as $20,000, but that move "clipped Tesla's profit margins." The result? As many as 14,000 Tesla employees will lose their jobs.

That might not come as a surprise: Tesla has long been the king of the electric vehicle market, and EV sales are famously slowing down. But Musk's company has a bigger problem. "EV sales are slowing," The New York Times said. "Tesla's are slumping." EV sales in America rose at a relatively anemic 2.6% from the first quarter a year ago; Tesla's fell by 13%. Who is benefitting? Automakers like Ford, Hyundai, Mercedes and BMW have all increased their share of the EV market. It has been a quick fall for Tesla: The company's market share "has fallen from 62% at the start of 2023 to 51% now." 

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Joel Mathis, The Week US

Joel Mathis is a freelance writer who has spent nine years as a syndicated columnist, co-writing the RedBlueAmerica column as the liberal half of a point-counterpoint duo. His work also regularly appears in National Geographic, The Kansas City Star and Heatmap News. His awards include best online commentary at the Online News Association and (twice) at the City and Regional Magazine Association.