From multi-billion dollar compensation packages to scandalous private escapades, Elon Musk’s fan base is getting a harsh reality check. Here are six inconvenient truths about the Tesla boss and his company.

As far as food is concerned, the matter is clearly regulated: all additives – animal proteins, sugar, palm oil, artificial flavouring and other flavour enhancers – must be listed and quantified on the packaging.

The realization that “you are what you eat” has become widespread, which is why politicians from all parties are ensuring the necessary transparency in the food industry on behalf of voters.

Not everywhere: This transparency is precisely what is lacking in the valuation of stocks and companies. The substance of buy recommendations and the accompanying praise from CEOs remain unclear because the pecuniary additives are concealed.

How heavily is the analyst’s bank actually invested in this stock?

Is the bank that is issuing its buy recommendation here applying for the consortium leadership for the capital increase?

Did the medium in which the hymn-like eulogy appears provide an honest analysis or was it simply advertising for the company’s next advertising campaign?

Change of perspective: This brings us to Tesla and Elon Musk. Anyone who wants to find out more about this company and its CEO will sink into a sea of ​​addresses of devotion, on which the poetry of homage drifts like a colorful buoy.

James Gorman, CEO von Morgan Stanley:

“Elon Musk is one of the greatest entrepreneurs and businessmen of the last century.”

Warren Buffett, CEO of Berkshire Hathaway:

“Elon Musk has managed to compete against established automakers like General Motors and Ford and win. That’s America. You can’t make this up.”

Cathie Wood, CEO von Ark Invest:

“Elon Musk is a visionary leader. He is our Renaissance man. He is the inventor of our time.”

In no other company – with the possible exception of Wirecard and Lehman Brothers – have truth and public perception, facts and opinions diverged so far from each other. So here are the six uncomfortable truths about the star CEO and his baby:

Strong competition: In the fourth quarter of 2023, the Chinese car manufacturer BYD sold more purely electric cars than Tesla for the first time. BYD was more than eight percent ahead of the American electric car pioneer. This is not a whim of statistics, but the beginning of a new chapter in electromobility. Tesla is experiencing relative decline compared to its competitors.

Lack of innovation: Since the Model Y four years ago, no new model has been introduced – with the exception of the “Cybertruck”, which is only available in the USA and widely ridiculed. Customers have so far been waiting in vain for the mass model announced by Elon Musk in September 2020 with a price tag of under $25,000. The Chinese competition has not only caught up, but overtaken in terms of technology, price and design.

Germany: Mercedes, VW, Audi, Porsche and BMW have also now parried Tesla’s attack. The new models are superior to the old Tesla model, according to a large number of international automobile tests. Alexander Bloch from auto motor und sport writes about the Volkswagen ID.7:

“Even Tesla can learn something from that!”

Former money-printing machine: In 2022, Tesla achieved record sales of $81.5 billion, an increase of 51 percent over the previous year. The company delivered 1.31 million vehicles at that time – an increase of 40 percent compared to 2021.

Status quo: These impressive figures seemed to make Tesla immortal. But the downward trend began as early as 2023. The operating margin of only 5.5 percent compared to Toyota (9.87 percent), Mercedes-Benz (13.44 percent) and BMW (17.58 percent) shows that Tesla is lagging behind its competitors.

No wonder: Wall Street is losing confidence. Tesla’s share price has fallen by more than 28 percent since January 1, 2024, and is likely to continue to fall. Since the peak of the hype in November 2021, the company has lost around $660 billion, or around 50 percent of its market value.

Tesla’s figures for the first quarter of 2024 paint a bleak picture: total revenue fell to $21.3 billion in the first quarter of 2024 from $23.3 billion a year earlier. A decrease of nine percent.

Gross profit fell to $3.7 billion in Q1 2024, down from $4.5 billion a year earlier, a decline of 18 percent year-on-year.

Kill your darlings: Elon Musk has not responded to the decline in demand with additional investments and innovations, but has announced a comprehensive wave of layoffs. Up to ten percent of the workforce – around 14,000 employees – are to leave the company. “We have to control our costs and ensure our profitability,” Musk wrote in an internal communication.

Elon Musk remains Elon Musk. With drug stories, private escapades (eleven children from three women), erratic leadership decisions and an openly expressed greed for money, Musk has offended his fan base.

Big money: In 2018, the CEO negotiated with the supervisory board a share package as compensation worth up to 56 billion – yes, billion – US dollars. That would be by far the highest compensation ever paid in US history.

Stop a minute: A court in Delaware, where Tesla is based, has blocked the package. The reason: Musk had exerted too much influence in the background and had too close a relationship with the supervisory board, which had not made an appropriate and independent decision. In response to the ruling, Musk now wants to move his company headquarters and thus the place of jurisdiction from Delaware to Texas.

At the annual general meeting on June 13, shareholders will vote on the compensation package and the move to Texas. The influential proxy advisor Glass Lewis has already spoken out against Musk’s plans. The electric pioneer suddenly appears before the audience as a greedy man.

Times are changing: Tesla has abandoned its ambitious goal of producing 20 million electric cars per year by the end of the decade. Now the current environmental report simply states that the company wants to displace fossil fuels by selling as many Tesla products as possible.

Musk had previously spoken of increasing deliveries by 50 percent annually, but now Tesla is only predicting a lower growth rate. The lack of a specific production target for 2024 is a departure from previous years.

The market continues to grow, but at a slower pace: According to data from BloombergNEF, sales of pure electric vehicles plus hybrid cars increased by 62 percent in 2022, compared to 31 percent in 2023. Market observers are forecasting an increase of only 21 percent for this year.

The Tesla problem: While competitors such as Volkswagen, Ford or Mercedes can rely on their combustion engine sales, Tesla is particularly exposed to a slower-growing electric car market. Hydrogen, hybrid drives and e-fuels are like poison for Elon Musk’s business model.

Conclusion: The story of Elon Musk is a story of castles in the air that are nice to look at but unfortunately impossible to achieve. The claim to market leadership in the electric age is not backed by the actual sales and production figures, nor by the intended investments. Or to quote the French writer Antoine de Saint-Exupéry:

“A goal without a plan is just a wish.”