Elon Musk, the CEO of Tesla and owner of the digital platform X, recently experienced a significant dip in his net worth by $30 billion. Tesla, the leading electric vehicle (EV) company, reported its most disappointing quarterly earnings per share in the last two years, which was 10% below the predicted negative forecasts by analysts. Consequently, Tesla‘s stock plummeted by over 17%, leading to a massive $138 billion loss in market capitalization within a span of two trading sessions.
Akio Toyoda, Toyota‘s chairman and its previous CEO, has often expressed doubts about the overenthusiasm surrounding EVs. His skepticism was among the reasons he relinquished his position as CEO of the renowned Japanese automotive company. With Tesla’s less-than-stellar earnings report for the third quarter, it appears Toyoda’s reservations were not unfounded. He commented on the situation, stating, “People are now witnessing the reality.”
Toyoda has consistently argued that EVs aren’t the sole solution for the automotive sector to achieve carbon neutrality. He often uses the analogy, “There are various routes up the mountain.” Other significant car manufacturers are also reevaluating their aggressive EV strategies. For instance, Lucid has decreased its production rate by 30%, and GM has postponed the debut of its Chevy Silverado EV by an entire year.
The EV market is currently facing challenges as increased interest rates are impacting customer demand for electric vehicles. Jessica Caldwell from Edmunds commented on this, noting that many potential buyers are deterred from entering the market.
While the EV market continues to grow, the momentum has decelerated. Data from the Wall Street Journal say that while EV sales continue to grow – rising 51% this year through September – the rate has slowed from a year earlier and unsold inventory is starting to pile up for some brands.
Caldwell remarked, “Transitioning to a novel technology is a complex endeavor. It demands individuals to reconsider their longstanding relationship with their cars. Expecting a seamless transition was perhaps too optimistic.”
Toyota‘s chairman believes he anticipated this situation. Toyoda has consistently recommended a diversified approach, emphasizing the importance of hybrids, hydrogen-fueled vehicles, and other sustainable alternatives.
Ford has also been cautious about fully committing to EVs, recently announcing a slowdown in the production of its F-150 Lightning pickup. Bill Ford, a direct descendant of the company’s founder, Henry Ford, has mentioned that the discourse around EVs has become highly politicized.
General Motors too has taken a step back after initially pledging to eliminate gasoline and diesel vehicles by 2035, citing reduced EV demand and strike-related pressures.
However, Caldwell believes this is just a temporary setback in the eventual rise of EVs. She states, “The trajectory is clear towards EVs. Denying that would be misguided. The path, however, remains uncertain and is the source of the current ambiguity.”