It’s no secret that Tesla (NASDAQ:TSLA) CEO Elon Musk’s controversial acquisition of Twitter has had adverse consequences for both Tesla and Twitter, with many employees leaving the latter and jeopardizing its existence. It has also affected Tesla’s brand and stock price, causing investors and customers to distance themselves from the company. Musk’s image and leadership have been critical to Tesla’s success and its share price, so it’s no surprise that while running Twitter is increasingly distracting, things aren’t going that well for Tesla.
Tesla shares have fallen by more than half since announcing the Twitter acquisition. To be fair, Tesla is facing stiff competition in the electric vehicle market as well, but that’s because its product line has also become stale, and it’s resorting to price cuts that have made its once-eminent leader. – Has damaged the image of the elite. Although Tesla’s stock has started to rebound, production delays and concerns about safety issues with the Cybertruck could negatively impact the company’s market share.
TSLA data by NASDAQ: NFLX) Initially allowing account-sharing, the theory was that the more people exposed to the concept, the faster Tesla could grow its customer base by encouraging the popularity of EVs in general.
Initially, it was a resounding success. However, nowadays it could potentially contribute to intense competition for Tesla, as other automakers may use some of its technology to produce their own EVs. While this has led to a proliferation of EVs in the market, it has also made it challenging for Tesla to maintain its competitive edge.
Tesla’s open-patent policy has spurred innovation and improved the quality of EVs, increasing demand for EVs in general and allowing Tesla to remain the market leader. However, the move has also increased competition from other competitors, especially in countries like China where EVs are more popular than in the US and where Tesla got a late start.
Tesla’s biggest challenge is the commoditization of EV technology, which undermines its competitive advantage. To remain the market leader, Tesla must continue to innovate and develop new technologies that differentiate its products from those of its competitors. Despite the challenges, the benefits of open-sourcing his patents far outweigh any potential adverse effects for Tesla. The decision to open up its patents to competitors has been a positive development for the EV industry and the environment.
Take away
Musk’s preoccupation with Twitter has hurt the company’s brand image and even held back innovation. However, Musk is not the only person at Tesla, and he is not the one designing or building the vehicles. Tesla’s ability to innovate, maintain its competitive edge and navigate regulatory hurdles will determine its long-term prospects. In addition, Tesla has set a long-term goal of increasing sales by 50% annually due to its dramatic price cuts, which have increased demand. Finally, Tesla’s open-patent approach has encouraged innovation and increased the potential of EVs, but it has also increased competition from Chinese automakers and commoditized EV technology.