In a bold and thought-provoking prediction, former Stellantis CEO Carlos Tavares has stated that Tesla may not exist in the automotive industry a decade from now. His remarks, which emerged in the pages of a French newspaper, suggest that Elon Musk may prioritize his expansive interests in humanoid robots, SpaceX, or artificial intelligence over car manufacturing.
Tavares, who stepped down from his role in late 2024, highlighted the fierce competition represented by Chinese automaker BYD, which recently overtook Tesla in global electric vehicle (EV) sales. He characterized BYD as more “efficient and cost-effective,” indicating that Tesla’s high market valuation could face significant reductions as this competitive landscape evolves.
Interestingly, while Tesla reported a revenue of $28 billion this week—a 12% increase year-over-year—the company has not managed to meet profit expectations for four consecutive quarters. Following the release of these numbers, Tesla shares dipped approximately 4%, summing up a disappointing year where stock performance has only increased by 9%, contrasting sharply with other major tech players.
Intensifying Competition from China
The competition from China has intensified as Tesla’s market share in the region has plummeted from 16% in 2020 to a mere 5% today. As automakers like BYD, Nio, and XPeng roll out competitively priced models with advanced technology, Musk has acknowledged the challenge: “Chinese car companies are the most competitive car companies in the world.” This competitive pressure has forced Tesla to implement aggressive price cuts, further squeezing profit margins and potentially eroding its premium brand image.
Despite these challenges in China, Tesla has managed to increase deliveries with a year-over-year growth of 33%. However, the price reductions that have driven this sales growth have introduced new dilemmas, including diminished profit margins and the need to maintain a strong brand identity.
Overcoming Growing Challenges
Tesla is currently navigating a myriad of challenges. The recent elimination of U.S. EV tax credits has removed a significant incentive for potential buyers, adding to the pressure to keep sales moving forward. In response, the company introduced more affordable “Standard Range” variants of its Model 3 and Model Y, undercutting higher trim prices by as much as $5,500.
Challenges do not end there; escalating supply chain issues and geopolitical tensions between the U.S. and China threaten Tesla’s operations, particularly in Shanghai. Moreover, Musk seems to be diverting attention away from Tesla as he engages in various other ventures, raising concerns among investors about leadership focus.
The urgency to maintain Musk’s involvement has led Tesla’s board to propose a staggering $1 trillion, 10-year compensation package designed to keep him anchored to the company with aggressive growth targets. However, this plan has drawn scrutiny from proxy advisory firms that argue the board may hold too much sway over when Musk meets performance metrics.
A pivotal shareholder vote regarding this compensation package is scheduled for November 6. In response to Tavares’ forecast, Musk dismissed the prediction via social media, claiming the former CEO “has absolutely no clue.” This back-and-forth exemplifies the evolving tensions within an already tumultuous industry.
With Tesla’s current valuation appearing to rest on expectations of future growth in AI and robotics rather than solely on car sales, the automotive giant stands at a critical crossroads. As the market scenario continues to expand, it remains to be seen whether Tesla will adapt and thrive or pivot entirely to other ventures.
