Tesla Isn’t Going To Advertise Its Way Out Of This One
Good morning! It’s Tuesday, April 23, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
The Hype Behind Tesla Stock Success In 2023
1st Gear: Tesla Sacks Its Entire Marketing Team
If you were asked to name the car maker that’s having the worst week, would it take you more than a few seconds to shout out Tesla? There’s little competition right now, as the struggling automaker deals with bodged recalls, bricked Cybertrucks and plummeting new car registration. Now, the automaker is facing layoffs, with Tesla cutting its entire marketing team after just a year on the job.
After big boss Elon Musk announced last year that Tesla was going to “try a little advertising and see how it goes,” the company’s entire growth content team in the U.S. has now been dismissed, reports Bloomberg. The move follows similar job cuts across Tesla’s design team and its Californian facilities. As Bloomberg reports:
In a post on X responding to Bloomberg’s report, Musk wrote of the content team’s work: “The ads were far too generic – could’ve been any car.”
The cuts mark a pullback from Tesla’s nascent advertising initiatives. The automaker had long eschewed television, radio, print or online ads — and had built a formidable brand largely through word-of-mouth.
Investors have increasingly called on Musk to focus more on marketing as global EV sales growth has slowed and more competitors have entered the market. Tesla’s embrace of advertising has also broadly coincided with Musk’s acquisition of the company formerly known as Twitter. The social-media platform has sought to stem a sharp decline in ad revenue, driven by major brands’ unease over content moderation and Musk’s own sometimes-controversial posts.
Now, Tesla will be hoping to find new ways to draw new buyers into the brand, which is facing a raft of bad press right now. The company is this week battling an embarrassing recall for its Cybertruck flagship after accelerator pedals on the near-six-figure truck came loose. The company also canned plans for an affordable model, which could have enticed reluctant EV adopters into the fold.
2nd Gear: One In Nine Cars Sold In U.S. Is Electric
Electric vehicles are having a rocky time of it in 2024. Companies like Ford have been slashing production targets, startups such as Rivian have cut prices and Tesla just posted its first drop in operating profits in years. But there is a ray of light for EVs, as it turns out sales of battery-powered cars are expected to rise this year as they begin making up more and more of the new cars sold around the world.
However, while China is projected to see half of new cars sold run on electric power and EVs could account for 25 percent of cars sold in Europe, that figure is much, much lower here in America, reports Reuters. Here in the Land of the Free, EVs are predicted to account for just one in nine new cars sold this year. As Reuters explains:
Sales in the first quarter of this year were up 25% on the same period last year. Though that rate is unchanged from the first quarter of 2023 versus the comparable period in 2022, it comes on top of a larger base of vehicles, the International Energy Agency said.
First quarter purchases were equivalent to total sales for the entire year of 2020, it noted.
Still, electric cars’ share of total purchases will vary widely by region, representing about one in nine vehicle purchases in the United States, one in four in Europe, but nearly half in China, the IEA forecast.
That depressingly low figure for the U.S. came as sales of EVs are projected to rise to 17 million units by the end of 2024, up from 14 million EVs sold last year. However, estimates from the International Energy Agency say that sales could be much more if we got to the bottom of two big issues: pricing and charging.
In Europe, adoption of EVs is being held back by the “phase-out of subsidies in some countries”, Reuters claimed. Battery powered models are much less affordable than their gas-powered counterparts, so subsidies offered in countries such as the U.S. and Germany help encourage buyers to make the switch. However, limited charging infrastructure and range anxiety is also a big barrier for some buyers. Reuters added:
“Electric cars are generally getting cheaper as battery prices drop, competition intensifies, and carmakers achieve economies of scale”, the IEA said, while noting that in some cases – adjusting for inflation – prices stagnated or even rose slightly between 2018 and 2022.
Meeting the growing demand with charging infrastructure will also pose a key challenge, the IEA added, with charging networks needing to grow six-fold by 2035.
In the U.S., charging infrastructure is steadily growing. Last year alone, the number of charging outlets in America increased by more than 20 percent to hit more than 64,000 chargers.
3rd Gear: GM Profits Hit $2.98 Billion
While Tesla is struggling, another American automaker is flying high as General Motors just announced that it made a ton of money at the start of this year. The Chevrolet owner saw its profit for the first three months of the year hit $2.98 billion, reports Automotive News.
Earnings at GM were up an impressive 24 percent for the period from January to March 2024 and U.S. revenue for the firm hit a new record, according to a report from Automotive News. As the site explains:
As a result, GM raised its full-year guidance for adjusted EBIT by $500 million, to a range of $12.5 billion to $14.5 billion. The automaker also upped its net income projection by $300 million to a range of $10.1 billion to $11.5 billion.
“Globally, our team is leaning into every opportunity with a focus on profitability to build on our strong start to 2024,” CEO Mary Barra said Tuesday in a letter to shareholders. “That’s why we’re raising our full-year earnings, earnings per share and free cash flow guidance.”
The automaker continues to target positive variable profit, which excludes fixed costs, on its electric vehicles in the second half of this year, CFO Paul Jacobson told reporters.
The sky-high earnings for General Motors came as cars like the Chevrolet Trax and Buick Envista continue to sell like hot cakes, with GM saying the models accounted “more of the company’s sales.”
4th Gear: Stellantis Layoffs Continue
Across Metro Detroit, conditions aren’t quite as rosey at rival Stellantis, which has been forced into yet another round of layoffs this time affecting its U.S. production facilities. The Jeep and Fiat owner previously announced a round of voluntary redundancies at its plants in Italy, and will now cut almost 200 workers from its Ram site in Michigan, reports Automotive News.
The latest round of layoffs at Stellantis will see 199 workers cut from the staff at the Sterling Heights Assembly Plant, which is responsible for assembly of the Ram 1500 pickup truck. The layoffs took effect on Monday. As Automotive News explains:
“With a focus on preserving business fundamentals in a highly competitive and challenging U.S. automotive industry, Stellantis continues to take action to improve the efficiency of its manufacturing facilities,” the automaker said in a statement Monday. “As a result of ongoing operational reviews, the company will be implementing indefinite layoffs across its U.S. footprint over the coming months. These actions will help improve productivity and ensure the company’s long-term sustainability in a rapidly changing global market.”
More than 6,000 workers at the Sterling Heights plant are represented by the United Auto Workers union, which secured new contracts for workers at Stellantis last year. In response, the union called the layoffs “disappointing, disgusting” and argued that the job cuts were a case of Stellantis putting “profits over people,” reports Automotive News.
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