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TESLA IS NOT THE NEXT FORD. IT’S THE NEXT CON ED.  
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Matteo Wong
April 24, 2024
The Atlantic
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_ Elon Musk’s EV empire is crumbling. _

, Paul Spella / The Atlantic. Sources: Shutterstock; Getty.

 

Of late, Tesla’s cars have come to seem a bit hazardous. Their
self-driving features have been linked
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to hundreds of accidents and more than a dozen deaths. Then, earlier
this month, the company recalled its entire fleet of Cybertrucks. A
mechanical problem that trapped its gas pedal, as _InsideEVs_ put it
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“could potentially turn the stainless steel trapezoid into a
6,800-pound land missile.”

Along the way, Tesla—which did not respond to multiple requests for
comment—has
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defended [[link removed]] its
cars and autopilot software. As of last week, the company told federal
regulators that the Cybertruck malfunction had not
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linked to any accidents or injuries. But even resolving every safety
concern may not stop Tesla’s entire EV business from becoming a
hazard. Yesterday afternoon, the world’s most valuable car company
released its earnings report
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for the first quarter of 2024, announcing that its net income had
dropped 55 percent from a year ago. On an investor call shortly after,
Elon Musk could offer only a vague euphemism to describe what has
become an especially disastrous month: His car juggernaut “navigated
several unforeseen challenges.” Just in April, Tesla has announced
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its first drop in sales since 2020, recalled one line of vehicles and
reportedly
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canceled plans for another, and begun mass layoffs
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There are still, somehow, six days left for the month to get worse.

Whether Musk can sustain his EV empire is now in doubt. He told
investors that Tesla’s primary focus is now on AI and self-driving
cars. But even if that pivot fails, the company has positioned itself
to be on the edge of another, perhaps more crucial part of the green
transition: delivering and storing America’s power. Tesla’s EV
chargers are ascendant, if not dominant, as are its huge batteries
that store renewable energy for homes and even entire neighborhoods.
Profits from Tesla’s energy business were up 140 percent compared
with the same period last year, and Musk asserted yesterday that the
division will continue to grow “significantly faster than the car
business.” The company’s future may not lie in following the
footsteps of Ford, then, so much as those of Duke Energy and Con
Edison. Tesla, in other words, is transforming into a utility.

Tesla’s core problem has been that its cars are falling behind the
curve. Even with sagging sales, the company remains America’s
biggest EV manufacturer, and its car sales still far outweigh the
revenue it gets from energy storage. But Tesla’s models, once
undeniably high-tech and cool, are aging.

The Cybertruck debuted in November, but Tesla has sold only about
4,000 of them, fewer than the number of F-Series trucks that Ford
sells on average in two days
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Otherwise, Tesla hasn’t released an entirely new passenger model in
more than four years. Its competitors have used the time to catch up.
The Chinese brand BYD is pumping out dirt-cheap, stylish cars
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and recently surpassed
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Tesla as the world’s leading seller of EVs. BYD’s cars aren’t
available in the U.S., but automakers such as Rivian, Hyundai, and
Ford are selling high-tech electric cars. Americans now want
affordable EV models, not just high-tech ones—and even Tesla’s
push to incrementally
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cut
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sticker prices hasn’t achieved that. In yet another April debacle,
_Reuters_ reported
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that the company had scrapped a long-anticipated, more affordable
model that would have sold for just $25,000. Musk did tell investors
yesterday that the company is speeding up the timeline for more
affordable vehicles built “on the same manufacturing lines as our
current vehicle lineup.” But he did not specify prices and declined
to answer a direct question about whether the cheaper cars will be
entirely new models or tweaks to existing ones
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The company still has one big advantage in the EV game. No matter
their manufacturer, nearly all future EVs in America will rely on
Tesla. Just as gas stations were necessary to make the highway system
usable, electric charging stations are a key hurdle to wider EV
adoption. Tesla’s Superchargers are much faster and more reliable
than those of many of their competitors, which is why most major auto
manufacturers have declared that they will adopt Tesla’s proprietary
charging port in future vehicles. The number of Supercharger stations
across the country has increased steadily for
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y
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and is expected
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to take off this decade.

In a few years’ time, those Tesla Superchargers might all also draw
power from Tesla’s batteries, which are the little-known core of the
company’s transformation into a power provider. As America continues
to pivot to clean energy, storage will become crucial: Solar and wind
are and will continue to be
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country’s fastest-growing renewables, but the energy grid can’t
just turn off at night, on a cloudy day, or when the breeze dies down.
Just as Tesla was ahead of the EV-adoption curve more than a decade
ago, it is set up to be king of the battery boom.

Since 2019, the company has been selling “Megapacks”—huge
batteries that hold enough electricity to temporarily power thousands
of homes—to grid operators in New York
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Massachusetts
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California
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Dubai
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Australia
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the United Kingdom
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and elsewhere, as well as to private customers, including Apple
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Tesla is continuing to ramp up the factory in California that
manufactures these batteries, as well as building another in Shanghai.
Until recently, there hasn’t been much competition
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and some analysts have predicted
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that the Megapack business could one day be worth “substantially
more” than Tesla’s cars.

Tesla also sells Powerwalls, large batteries designed for home
installation. Powerwalls have made up roughly half
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of all home-battery installations since 2018, and demand is set to
explode
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The company deployed more than twice
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as much energy storage in 2023 as in the year prior. Tesla also has a
line of solar panels, and though that business has proved fickle
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it is yet another way for the company to provide the raw power that an
electrified world will require. With its chargers and batteries,
Tesla’s main products are becoming infrastructural, a step removed
from consumers but no less essential. Vaibhav Taneja, the company’s
CFO, said yesterday that energy-storage deployment should grow by at
least another 75 percent this year and begin “contributing
significantly to our overall profitability.”

That future, of course, is far from preordained. Tesla’s auto
business remains one of the few profitable EV operations in the
country; Ford and GM are losing billions of dollars on EVs as they
retool their companies away from the internal-combustion engine. And,
to say the least, Musk is hardly a predictable executive.
Yesterday’s earnings call suggested that he is more infatuated with
self-driving robotaxis
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than electrifying the grid: He’s doubled Tesla’s AI-training
resources in three months. But self-driving cars are the opposite of a
safe bet, and semiautonomous vehicles, which have become the industry
standard
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will no longer set Tesla apart. Clean energy is a highly
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competitive
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capital-intensive, and rapidly changing industry. Just like its
massive head start in the EV field, Tesla’s battery and charging
advantages will not be self-sustaining.

But absent a far more catastrophic collapse, Tesla appears to be
successfully jumping from one wave of the clean-energy revolution to
another—from providing cars to providing the electricity that will
power not just cars, but also homes, offices, and more or less
everything else. A decade from now, even as Tesla vehicles slide in
popularity, the company’s influence may prove stronger than ever.

Matteo Wong [[link removed]] is an
associate editor at _The Atlantic_.

* Electric Cars
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* Elon Musk
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