Is Elon Musk steering Tesla into a ditch?

The billionaire CEO's strategic price cuts are just the latest headache for investors

Tesla logo.
(Image credit: GettyImages-1251930781)

It's no secret Elon Musk has had a tough few months: a chaotic Twitter acquisition, an explosive (but nonetheless cheered) SpaceX rocket launch, and now, continued turmoil within his electric car brand, Tesla, for which the billionaire CEO has opted to slash prices in hopes of driving up lagging demand. "This is a good time to increase our lead further, and we'll continue to invest in growth as fast as possible," Musk said recently of the changes, noting on an April 19 earnings call that Tesla has a "unique strategic advantage" in that its drivers are already primed as customers for the company's self-driving software — whenever that debuts. "We've taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and a higher margin," he added.

It's a huge gamble, and one investors aren't entirely sure will pay off. In fact, 17 major company shareholders have since called on Tesla's board to do something about Musk's behavior, which they've deemed distracted and damaging. "Corporate boards can and should intervene if a chief executive appears to be distracted or overly focused on other ventures," the group, which collectively holds $1.5 billion worth of Tesla stock, wrote in its letter. "Yet, the Board has permitted Elon Musk to run multiple companies, leading to an inability to address the multiple strategic and competitive issues facing Tesla." Indeed, while first-quarter deliveries rose 36 percent from the start of 2023 — when the staggered price cuts first began — quarterly gross profit margins plummeted to their lowest point in two years. Ultimately, Musk's entire approach is one lacking both precedent and "consensus as to whether it heralds more industry disruption or signals [his] desperation," Craig Trudell wrote for Bloomberg.

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Brigid Kennedy

Brigid Kennedy worked at The Week from 2021 to 2023 as a staff writer, junior editor and then story editor, with an interest in U.S. politics, the economy and the music industry.