Can Tesla survive without Elon Musk

The bubble will burst if Tesla continues to adhere to the one-model policy

Last week the time had finally come: Tesla's market valuation shot through the roof and reached dizzying heights. Tesla is now worth more on the stock exchange than Volkswagen, Daimler and BMW combined. And that although Tesla only produces a fraction of the number of vehicles compared to German manufacturers. While the annual production output of the German carmaker is over 14 million cars, Tesla's only 400,000 electric cars leave the plant (as of 2019). And it doesn't look much better with the proceeds either. Tesla has made a lot of money in the last few quarters, but they are still pushing a huge mountain of debt. In contrast, the other manufacturers are sitting on full cash reserves.

Without a doubt, Elon Musk's company is a success story. Tesla has been ignored and not taken seriously by the competition for years. When Daimler sold the shares it had acquired five years earlier for a hefty profit in 2014, the Board of Management condescendingly remarked that it was the only company in the world that had ever made money with electromobility. The times have changed. Tesla mainly collects the so-called premium customers. Those buyers who would otherwise have opted for an Audi, BMW or Mercedes often and happily reach for the Tesla Model S, X or 3. That hurts German manufacturers, because they used to be their customers.

What speaks for a high rating

The US company has shown the other manufacturers where their weaknesses lie. Unlike the Germans, the production of important components such as battery cells, rechargeable batteries and software is completely in the hands of one company: Tesla. The decision to rely on suppliers in this country or to try to manufacture these components yourself with minimal effort has turned out to be a disadvantage.

As is well known, Tesla depends on the competition for miles, especially when it comes to software, as VW boss Herbert Diess recently had to admit. And while the buyers of new e-cars in Germany are grappling with a chaotic charging infrastructure, Tesla has set up its own network for its customers. In addition, Tesla is particularly successful in China. The Model 3 sells five times as well as the competition and is at the top of the electric car sales charts.

And what speaks against a high rating

But there are certainly arguments why one should be skeptical. Apart from the capricious behavior of Elon Musk, which has brought the company into difficulties several times, the model range in particular invites doubts.

The entire success of Tesla over the past two years has basically been based exclusively on the Model 3. That now accounts for more than 80 percent of sales. The two previous bestsellers, the Model S and X, on the other hand, are weakening in terms of sales. The Model S in particular could use a new edition urgently, because it is getting on in years. In addition, the competition is slowly offering good alternatives. Porsche has the Taycan, and Audi will be presenting the E-Tron GT at the same level in a few months' time. And from Daimler comes the EQS, which is also in the starting blocks and, according to the manufacturer, should have a range of up to 700 kilometers.

The entire future success of Tesla will therefore continue to be based on the Model 3. And here, too, the competition is not idle: Especially in the market for vehicles between 25,000 and 35,000 euros, there are now some manufacturers and the number is increasing every year. What Tesla urgently needs are more model variants. In addition to the upper middle class, something is needed above all in the polo and golf classes. But so far nothing has been announced in this direction. Instead, it just targets an expensive sports car and a strange Tesla pickup.

The one-model policy has its weak points

And not every market reacts to Model 3 as enthusiastically as the USA or China. Tesla was able to sell just 703 units of its mid-range model in Germany last month. In terms of e-cars, you had to line up behind the Renault Zoe and the E-Golf. A total of just 841 vehicles were sold in this country. For comparison: Daimler sold more than 21,000 vehicles.

Can a company whose success is based on only one model be valued this highly in the long run? Sure, you can be very successful with just one offer. What speaks in favor of Tesla is that the company's lead in software, infotainment and the range of the cars seems unachievable so far. The big question, however, is: how long will this be the case and how long can Tesla survive its one-model policy?

Don Dahlmann has been a journalist for over 25 years and in the automotive industry for over ten years. Every Monday you read his column "Torque", which takes a critical look at the mobility industry.

Image: Getty Images / Sean gallup