Despite the much-ballyhooed impending release of the Model 3, mass market sedan, Tesla was just bumped from the top spot of most valuable automaker in the United States. For a few months, Elon Musk’s electric car company reigned as the most valuable, ahead of even stalwarts like Ford and General Motors.
For a year, it had been smooth sailing for Musk, whose SpaceX company was making great news week in and week out. That, along with a series of positive articles about the growth and future potential of Tesla, had company executives riding high. Then the other shoe dropped. Despite the hype and positive press, there were some problems brewing under the hood over at electric car land.
Musk wanted Model 3 production dramatically increased to meet expected demand. That created all sorts of compounding issues. Turning enthusiastic investors more gun shy. With that reluctance came a sharp drop in company valuation – up to 17 percent – putting GM back in the top spot by default.
But what really happened to drive this downturn? Is there any “there” there, or is it just media smoke and mirrors followed by the typical fluctuations in the market as a company inches closer to a major retail push or product rollout?
Well, as it turns out, might be a little bit of both. Any time Elon Musk is in the picture, there will be media hype. In himself, Musk is a one-man PR machine, no matter what’s happening with his companies.
That said, there were – and are – some tangible issues with Tesla. The amped production timetable ended up slowing production down, which forced the company to move the expected release date. That was followed unceremoniously by the admission that Tesla was struggling to make the battery packs necessary to meet the need. It was this second hurdle that really hit the company hard. Investors don’t like it when companies over promise. And, while that may not actually be the case here, if they can’t figure out a way to solve this problem, it doesn’t matter how many cars they make … they won’t go anywhere.
Of course, there is a silver lining. This is, after all, Elon Musk. The guy whose people found a way to make electric cars affordable and whose other company also found a way to reuse rockets when everyone said it was too expensive or untenable, is sure to figure out a way to get over this hurdle and onto his next project.
At least, that’s the current line coming from Tesla. Sure, there have been setbacks. There always are when you’re doing something no one has done before in a way nobody has been able to do it. Tesla wants investors to take a deep breath, be patient and watch them work it out. They’ve earned that right … but the clock is still ticking.