Tesla Sales Continue to Fall as Elon Musk Pushes for Full Self-Driving

Tesla announced that sales of its electric vehicles fell 7% in the second quarter of 2024.compared to the same time period in 2023. The company missed Wall Street expectations, sending its stock price down more than 10%. They also announced that they would pause construction of the Gigafactory in Mexico until they know who wins the US presidential election in November.

This continues the slowdown in auto sales that began in the first quarter of 2024, when just 386,810 vehicles were delivered. This is well below the 422,875 units delivered in the first quarter of 2023. Tesla blamed external circumstancessuch as the Model 3 production halt in the US, traffic problems in the Red Sea and an attack that caused a fire at the Berlin Gigafactory.

But, although units were delivered in the second quarter of 2024 increased to 443,956the manufacturer seems to be starting to reach the ceiling of car sales. At least with the current range, prices and sales policy.

In addition, although Tesla remains the largest electric car company in the world, it faces increasing competition, especially from Chinese manufacturers. And from traditional auto multinationals, which are slowly releasing more advanced electric models.

In addition, Elon Musk, the company's CEO, does not seem interested in changing some of its sales policies to try to reach a much larger base of potential owners.The manager initially assured that he would be open to advertising his cars, but after a few months he fired the entire team heading the new division.

When asked about this on a call with shareholders after announcing their Q2 2024 financial results, they assured that 75% of the people who bought Teslas in that time frame were new buyers, so "there's no need to advertise." The question is how much more that percentage would increase if they put in a real marketing effort to make their product known to a wider audience.

Elon Musk Runs Forward

Elon Musk doesn’t seem too worried about the continued decline in car sales. Partly (even though they made less profit than expected) because their revenue was higher than Wall Street had estimated. That’s because Tesla’s energy division earned $3 billion, a new record. And partly because the executive believes that the company’s future lies in fully autonomous driving.

Elon Musk is right. Without a doubt, fully autonomous driving is the future. This would lead to a terrifying level of differentiation for Tesla from the rest of the industry. If the company is years ahead of its competitors on a technology level, then having its fleet of cars circulate using artificial intelligence would be a league table-smasher like no other.

Moreover, fully autonomous driving, being software, brings in much higher profits than manufacturing cars or other hardware products. This could give the company the opportunity to become one of the most valuable in the world. In addition, fully autonomous driving can be used by other brands under a license to use.

But there are very high walls to climb behind this theory. The first and most important thing is to demonstrate that full autonomous driving, as Tesla envisions it, is viable. With hundreds of videos of people driving cars without human intervention, it seems like it will happen sooner or later. But there’s also plenty of content showing that there’s a lot of work to be done. And that the reality of cars driving themselves will be ten years from now, not “next year,” as Elon has been saying every year since 2015. Do you know the story of the wolf? Good thing.

The second Great Wall is about permits. Tesla has the green light for fully autonomous driving in the United States, thanks to looser regulations. That’s not the case in the two other most important markets: China and Europe.

Musk personally visited China to pressure regulators there to allow fully autonomous driving in a market that is potentially as relevant or more so than the United States. Things are even more complicated in Europe. Even so, the CEO assured that they are working to get the necessary approvals in both regions by next year.

But beware of Elon Musk's empty promises. In 2021, during the opening of Gigafactory Berlin, it was announced that they would receive approval for the use of fully autonomous driving in Europe by the end of the year. Which, of course, did not happen.

Musk is comfortable telling his shareholders and investors that they will get approval for fully autonomous driving in Europe and China in 2025. If that doesn't happen, what future does the company have? It can only be used in one country - the USA..

Finally, if they don’t sell cars, the scale viability of fully autonomous driving will be limited. Tesla intends to solve this problem with Robotaxi. But if self-driving cars with steering wheels and pedals are difficult to get regulatory approval for, then a car that humans can’t physically intervene in could be a legal nightmare to get approved for, even in the United States.

Licensing the use of fully self-driving technology to other manufacturers could also be a pretty positive economic path for Tesla. But Elon Musk admitted on a shareholder conference call yesterday that to do so, they would have to work with other brands for several years to be able to adapt all the necessary components, including cameras, computers, constant internet connectivity, and more.

Tesla's Future Involves More Active Car Salesdemonstrating that they continue to be leaders not only in sales, but also in the production of the best electric vehicles in the world. The most technologically advanced, the most efficient and the safest.

2024 is and will be a tough year for Tesla. They are introducing two new cars in 2025 that I am pretty sure will be cheaper versions of the Model 3 and Model Y rather than the Model 2. This could give sales a boost and reach an economic range they can't reach now.

Tesla boasts of Biden's help in boosting car sales, while its CEO backs Trump, who promises to end such incentives.

A separate issue is Elon Musk’s hypocrisy regarding his political leanings and interests as Tesla CEO. In its Q2 2024 earnings presentation, the company boasts of its sales thanks to the Model 3 being eligible for aid and incentives from the Biden administration.

But at the same time, Musk has publicly endorsed Donald Trump, a candidate who promised during his campaign to end incentives for electric vehicles as a first step if he wins the presidency again.

The question is, what's more important to Elon Musk: being CEO of Tesla (even part-time) or his political beliefs and staying on good terms with Trump?