Peter Wells, director of the Centre for Automotive Industry Research at Cardiff University, discusses Tesla's recent revenue and profit drop, emphasizing that it's crucial to consider the longer-term picture. Tesla missed the opportunity to become a mature car company when they were cash-rich and had strong public support. Now, they face growing competition and price pressure, especially from Chinese EV makers.
00:00Well, Peter Wells is the director of the Centre for Automotive Industry Research at Cardiff University.
00:06Hello to you, Peter.
00:07Tesla's results for the second quarter show a sharp drop, don't they, both in revenue and in profits, too.
00:14How significant do you think those numbers are?
00:18Well, I think it's easy to get focused in on the immediacy of the news.
00:23Understandable, of course.
00:24And these are, I think, for Tesla, a really significant shot across the bowels, as we would say.
00:30But I think you need to look at the longer term picture here.
00:33I think there was a period of time, maybe 24 months ago, when Tesla still had the opportunity to become what you might think of as a mature car company.
00:43In other words, running a business that followed the kind of practices and procedures and approaches of mainstream car companies.
00:51They didn't take that opportunity when they were cash-rich, when their brands were strong, and when they still had a lot of public support.
01:00Now they're in a very difficult position.
01:03They've lost some of that support.
01:05They've still got a lot of cash, but they haven't been able to develop a full suite of really affordable, interesting, innovative models.
01:13They're resting on their roles, and they're still under the control of their own must.
01:18And I think that is probably their key problem.
01:20I mean, vehicle deliveries fell by around 14%, didn't it?
01:25I mean, do you think this reflects, as you were saying, a weakening in demand for Tesla caused by the product and by Elon Musk himself?
01:33Or is there a case that some of this is to do with growing competition and price pressure, especially from Chinese EV makers?
01:41Well, of course, in a sense, all of the above.
01:43But this is the transition from being a leading innovative business in a new and emerging market to being just one of many in a much more mature market.
01:55It's not settled yet, but it's nearly maturing, which means many more competitors offering a diversity of products with all sorts of interesting innovations.
02:04And to be honest, I don't feel that Tesla has yet kept up the pace in that sense.
02:09They still have lots of advantages.
02:11They're getting revenue from their charging network, for example.
02:14They're still strongly vertically integrated, and that helps.
02:17But unless they can really focus in on developing that new product, I don't see how they're going to get out of this.
02:24And to be honest, I do not see that focus.
02:27It still seems to me that Elon Musk is talking about the robotaxis as being the future for Tesla.
02:33Well, I think he needs a stronger car brand before he goes down that route.
02:37Talking of the brand, Elon Musk has highlighted Tesla's pivot, if you like, toward robotaxis and artificial intelligence.
02:46In your view, how realistic is this strategy in the near term?
02:52And do you think it can meaningfully offset weak car sales?
02:56Well, I think this is what I mean by saying he should have done this earlier, because right now, I don't think it's good timing.
03:05There are other competitors with products already in the market, further developed than Tesla, using a different technological approach than Tesla.
03:14And so I think it's far too early to be talking about significant revenue streams for autonomous Teslas, when it's just one or two trial vehicles running around one city in Texas.
03:25This is the reality that Musk is currently facing.
03:28He talks a good game.
03:30He's very good at promising things into the future.
03:32But now the time is running out.
03:35The available space is being squeezed.
03:38And I'm not concerned that Tesla is able to pivot quickly enough to be able to capture that emerging market.
03:45Peter Wells, live for us from Cardiff University.
