The pitfall of Tesla today was already laid three years ago when it was at its peak

After Tesla's stock price plummeted due to first-quarter delivery data, an exclusive media report once again put it in the spotlight.

Local time on Friday, the media reported that Tesla had abandoned the production plan for the affordable Model 2 and instead shifted its focus to developing autonomous driving robot taxi technology.

Elon Musk quickly responded by posting on X platform accusing the media of "lying," but did not point out any specific errors.

After the media report, Tesla's stock price plummeted by more than 6% at one point, but partially recovered after Musk's post, narrowing the decline to 3.6% by the end of Friday's trading.

Shortly after, Musk posted on X again, stating, "Tesla Robotaxi will debut on August 8th," and Tesla's stock price responded positively in after-hours trading.

This seems to imply that Tesla may have shifted its focus to Robotaxi, indirectly confirming the media's previous report about Tesla abandoning the development of affordable cars.

Investors once viewed affordable cars as a new growth point for Tesla's performance, but now this beautiful vision has turned into a mirage. Meanwhile, facing numerous regulatory obstacles, high costs, and the reality of immature autonomous driving technology, Robotaxi may not be able to support Tesla's next growth phase.

Competition in the global electric vehicle market is intensifying, Tesla's sales remain weak, and its once enviable profit margin is shrinking. Tesla's biggest problem is no longer whether it can produce enough cars, but whether people will buy them.

Since the beginning of this year, Tesla's stock price has cumulatively fallen by 34%, making it the worst-performing component stock in the S&P 500 index. Although Tesla remains the world's most valuable automaker, its market value has shrunk by more than half from its peak in 2021.

"Tesla is transitioning from its golden age to a challenging era," commented former Ford CEO Mark Fields.

When Tesla was at its peak, Musk shifted his focus to robots

Looking back at history, Musk had already planted the seeds of problems three years ago.

In 2021, Tesla emerged from years of financial difficulties and production bottlenecks, continuously setting new profit records and dominating the market.

At that time, the chip shortage forced many competitors to reduce production, but Tesla's factories continued to operate at full speed. Consumer demand was booming, and even with frequent price increases, new car orders were still backlogged for months, with used cars even selling at a premium.

Following this, other carmakers rushed to emulate Tesla in the electric vehicle race, while Musk had already set his sights on artificial intelligence robots, leading the next trend.

In the summer of 2021, Musk appeared in his iconic all-black outfit at a Tesla recruiting event in Palo Alto, unveiling Tesla's latest achievement - the humanoid robot OptimusAt that time, Musk told the audience, "Tesla is far more than just an electric car company. In the future, physical labor will become a choice."

In late October 2021, rental car company Hertz announced that it is ordering 100,000 Tesla vehicles to expand its electric vehicle fleet. For investors, this deal signifies that electric vehicles are becoming mainstream, and soon more drivers will have the opportunity to try electric cars.

In early November 2021, Tesla's market value finally surpassed $1.2 trillion, skyrocketing over 20 times in just two years.

However, the good times did not last.

Musk began selling Tesla stocks, cashing out over $39 billion over a year, causing market panic. Some of the funds were used to acquire Twitter, putting pressure on Tesla's stock price.

Supply chain issues highlighted, Musk shelves plans for affordable cars and focuses on developing higher-cost FSD

As we entered 2022, more unexpected events unfolded.

Musk announced that due to supply chain issues, no new car models would be launched that year, and the plan for developing affordable cars was also put on hold. At that time, Tesla was selling 4 models, with Model Y and Model 3 contributing the majority of sales.

"We already have enough on our plate," Musk said.

For car companies that rely on new products to attract consumers, this move was extremely risky. Analysts questioned whether Tesla could achieve its growth targets with existing models.

Musk dismissed these concerns. Instead, he hinted at his vision for the future: Tesla cars will be able to operate autonomously around the clock, making them more valuable.

Musk said, "From the perspective of the problem, the importance of Full Self-Driving (FSD) has not been fully recognized."

It now appears that Musk has long been betting Tesla's future on autonomous driving, especially Robotaxi.

In the second half of the year, signs of weakness in Tesla's most important market, China, began to show, with new car waiting times dropping from over 4 months to 1 month.

Executives urged Musk to restart the plan for affordable cars, stating that this was crucial to achieving growth and supporting the autonomous driving project. However, Musk insisted on developing Robotaxi, showing more interest in developing autonomous driving cars that can operate in a fleet of robot taxis.

Subsequently, FSD technology developed rapidly, but Tesla's sales performance was disappointing.

To stimulate demand, Tesla reduced prices by 7% in China in October, followed by a series of car purchase incentives in the United States. However, Tesla's performance at the end of 2022 still disappointed the market. While its annual car deliveries increased by 40% year-on-year, it fell short of the company's initial target and Wall Street's expectations.

In 2022, Tesla's stock price had its worst annual performance ever, dropping by 65%.

Tesla without new cars, even with significant price cuts, is not enough to convince consumers to make a purchase

In January 2023, Tesla was forced to significantly reduce prices globally, with the highest drop reaching nearly 20%. This move was seen as a bold gamble, but Musk believes that with higher profit margins, Tesla can withstand the price war and even use it to pressure competitors.

This strategy did boost Tesla's sales for a period of time. According to data from Fuguo Bank, in the first half of 2023, Tesla's car prices globally dropped by an average of 12%, with deliveries increasing by 19% compared to the previous six months.

However, in the second half of 2023, this strategy seemed to backfire. Despite continuing to lower prices and increase incentives, Tesla's car delivery growth slowed to 3%, a figure that analysts at Fuguo Bank described as "worryingly low."

Some in the automotive industry have also begun to feel dissatisfied with electric vehicles.

Dealers are concerned about inventory backlog, and car companies are reducing investments in electric vehicles and turning to more popular hybrid models. Apart from the highly anticipated but frequently delayed Cybertruck, Tesla has no other new vehicle plans.

Competition in the Chinese market is becoming more intense. Domestic brands like BYD are accelerating the launch of affordable electric vehicles to seize the domestic market and expand overseas.

Rental giant Hertz, which once made large purchases of Tesla vehicles, has sold one-third of its electric vehicles due to low resale value and high maintenance costs, with most of them being Tesla cars.

Then there is the news from earlier this week. In the first quarter of 2024, Tesla's global deliveries fell by 8.5% year-on-year to 386,800 vehicles, hitting the lowest record since the third quarter of 2022, far below Wall Street's lowered expectations.

Meanwhile, since acquiring Twitter, Musk has frequently spoken out on sensitive issues on social media, further exacerbating the negative impact. Market intelligence company Caliber stated that from September 2022 to March 2024, Tesla's "purchase consideration rate" among American consumers dropped from 46% to 35%.

Facing a decline in performance, Musk argued during the first-quarter conference call that Tesla is in a transitional period between two growth cycles.

The first wave began with the global expansion of Model 3/Y, and we believe the next wave will be triggered by the global expansion of the next generation of cars.

He pinned his hopes on the next generation of electric vehicles, originally scheduled to be launched for production by the end of 2025, including an affordable car. According to media reports at the time, Tesla may name this affordable car the Model 2, with a price of around $25,000. This once again filled Wall Street with anticipation for Tesla's future.

However, with the Robotaxi scheduled, speculations from the outside suggest that the plan for the affordable car will once again be shelved

Should Musk choose between budget cars and Cybertrucks?

Despite pointing out several issues affecting first-quarter performance, including interruptions in the supply chain and the shutdown of the Berlin factory in Germany, former executives and analysts say Musk must now personally lead Tesla through its toughest period since the "crisis" of 2018.

A former Tesla executive who reported directly to Musk said, "Ultimately, he is not a magician, although he has always seemed like one in the past 15 years." "Honestly, I don't know what leverage he's using. Without new products, he won't take further price actions."

The former executive said: "They put money in the wrong place. They should invest in Model 2 instead of Cybertruck."

Musk also admitted during last year's Q3 earnings call:

"Developing the Cybertruck is digging our own grave."

Musk had previously warned that increasing production of the Cybertruck would be very difficult, with deliveries of 250,000 vehicles per year not possible until 2025. According to media estimates, the current production speed of the 4680 batteries is only enough to equip 24,000 Cybertrucks per year