Two decades ago, a visionary entrepreneur named Elon Musk embarked on a mission that would revolutionize the automotive industry forever. As Tesla celebrates its 20th anniversary, we reflect on the remarkable journey that has unfolded under Musk’s leadership. From its humble beginnings as a fledgling electric car startup, Tesla has emerged as a pioneering force, challenging the status quo and redefining what is possible in the world of automobiles.
Through relentless innovation, groundbreaking technology, and a relentless commitment to sustainability, Elon Musk has not only transformed Tesla into a household name but has also propelled the entire auto industry into an era of electrification and renewable energy.
Tesla, under the visionary leadership of Elon Musk, has shattered industry norms with its electric vehicles, innovative production methods, direct sales approach, and advancements in autonomous driving. This unique approach, devoid of traditional industry constraints and imitation, has forced competitors to acknowledge Tesla’s significance. Often associated with terms like visionary, disruptor, and revolutionary, Tesla has completely transformed the automotive landscape. For over a century, internal combustion engines dominated the market until Tesla arrived and propelled electric propulsion into the mainstream. This breakthrough marked the beginning of a revolution that continues to gain momentum.
Despite facing numerous challenges in its early years, Tesla has emerged as a dominant force after two decades. It currently holds the global market leadership in electromobility, leads in battery technology, and plays a vital role in autonomous driving development. Tesla strives for first place in every aspect, driven by its CEO and primary shareholder, Elon Musk. With 1.31 million vehicles sold last year, Tesla surpassed Audi in unit sales during the first quarter of 2023. If this growth rate persists, Tesla is projected to surpass Mercedes-Benz and BMW by 2024. Musk anticipates annual sales growth of 40 to 50%, aiming to sustain Tesla’s unprecedented success.
However, Tesla faced a significant setback in 2022. Musk’s erratic behavior, including the controversial Twitter acquisition and his criticism of “woke” society on social media, raised concerns among investors and led to a sharp decline in the company’s stock market value, amounting to several hundred billion dollars. Recognizing the need for action, Musk made a strategic move to address the situation. He appointed Tom Zhu, Tesla’s China chief, to oversee the company’s U.S. assembly plants as well as sales operations in North America and Europe, effectively calming the situation.
To drive sales, Tesla implemented price reductions, but this move exerted immense pressure on profit margins, resulting in an immediate negative impact on investor sentiment. Crisis management has become a familiar task for Musk, and he is currently engaged in navigating the challenges. Nevertheless, Tesla remains the world’s most valuable automaker, with a market capitalization of approximately $830 billion, signifying its status as more than just a traditional automaker but as a technology company in the financial market.
Despite achieving annual sales growth with just four models, Tesla primarily relies on the success of the Model Y and Model 3, while the higher-priced Model S and Model X face challenges in customer demand. Musk understands that for the success story to continue, expanding the product range is crucial. Planned additions to the lineup include the Cybertruck pickup, the Semi-Electric Truck, and a smaller car. In September 2020, Musk expressed the intention to cover various vehicle segments, including a compact car and a van or minivan. While progress has been made in the company’s model plans, concrete details, particularly regarding the compact model, are still lacking.
The factors behind the tremendous success of Tesla, which recently celebrated its 20th anniversary on July 1, are widely recognized and extensively debated. From the very beginning, Musk defied industry norms and conventions. Tesla introduced groundbreaking concepts such as an all-electric drive, a centralized control architecture, intelligent production methods, proprietary charging infrastructure, direct sales, digital features, and autonomous driving capabilities. These innovations were conceived without the burden of legacy issues and without imitating others. Eventually, competitors came to the realization that Tesla must be taken seriously in the market.
Undoubtedly, Musk himself plays a significant role in the company’s triumph. Adored by his fans as an entrepreneur, self-made billionaire, tech enthusiast, and second-wealthiest person in the world, Musk also faces a fair share of critics and adversaries. The success he achieves often triggers feelings of envy and resentment. Furthermore, his controversial actions and outspoken nature further contribute to the polarization surrounding him. Regardless of Musk’s actions, he continues to evoke strong reactions.
Musk leverages his vision of autonomous driving to enhance Tesla’s appeal in the financial market. While electric mobility is gradually becoming commonplace and no longer a unique selling point, self-driving cars hold the potential to bring about the next revolution in the industry. Tesla’s Autopilot system, although advanced compared to competitors, is not without its limitations and is not considered the ultimate standard.
However, many of Musk’s grand promises have yet to be fulfilled. During the company’s quarterly earnings presentation in April, he expressed the belief that Tesla could currently sell cars at no profit and generate substantial profits later through autonomy updates. The realization of these ambitious claims remains a future prospect that has yet to be fully realized.
Musk envisions vehicles evolving into smartphones on wheels, representing a significant business model for the future. However, this vision requires substantial investments. Musk injects between $6 billion and $7 billion into Tesla’s business annually, primarily directed toward technological advancements and the establishment of new manufacturing plants. To successfully penetrate the mass market on a large scale, as Tesla plans, the company would need to significantly increase its investment levels, as acknowledged by CFO Zachary Kirkhorn in March.
Expanding capacities at an extraordinary pace is crucial to sustaining the planned growth trajectory. Tesla’s next production facility is under construction near Monterrey, Mexico, while plans for the expansion of their European Gigafactory in Grünheide, near Berlin, have recently been submitted. Musk expressed during an Investor’s Day event in March that the demand for Tesla’s cars could be limitless, projecting sales of around 20 million vehicles in 2030. This figure would surpass the combined sales of the current market leaders, Toyota and Volkswagen. Musk’s focus now is on capturing market share, even if it means deferring immediate profits. He has emphasized the importance of extending Tesla’s lead and making swift investments in growth.
The significant price reductions implemented by Tesla can be seen as a strategy to justify and solidify its market position. While these reductions please new customers, they are met with concern from investors and shareholders who prioritize profitability. Musk’s confidence in Tesla’s future prospects may stem from the planned introduction of a compact car, projected to have a price tag below $25,000, and the potential for large-scale production. Currently, there is a lack of affordable electric vehicles on the market, which Tesla aims to address.
Tesla and Musk are inherently intertwined. Musk has served as CEO for 15 years and holds the largest share in the company. At times, he has also held the position of board chairman. However, there is a growing sentiment among some stakeholders that broader leadership is necessary. In an open letter to the board, investors emphasized the need for a CEO who prioritizes leading the automaker above all else.
Musk’s influence extends across various ventures, and two of them—Twitter and his rocket company SpaceX—have recently garnered significant attention. The appointment of Linda Yaccarino as the head of Twitter signifies a step forward in Musk’s involvement with the platform. Similarly, in selecting Zhu as a key figure within Tesla, Musk has chosen a potential successor. Zhu now collaborates with Musk at the Austin headquarters. However, there has been a pattern of crown princes and supporting stars, such as Jeffrey Straubel and Andrew Baglino, who were subsequently replaced or phased out. Instead of expanding the support network, Tesla’s board has gradually diminished in size.
In the coming years, Tesla will face the challenge of fending off increasing competition. EVs are gaining widespread acceptance worldwide, leading to the introduction of numerous new models from established and emerging car manufacturers. These competitors are not to be underestimated. To maintain its position, Tesla must continue to lead in technology and remain superior and exclusive compared to its rivals.
However, other companies, such as the Chinese group BYD and Volkswagen, aspire to be recognized as technology leaders as well. Tesla is no longer alone at the pinnacle.
Nevertheless, Musk, known for his unwavering self-confidence, remains certain of Tesla’s exceptional position. He asserts that no other carmaker in the world is as well-positioned as his company.