EV giant Tesla, once considered to be the biggest disruptor in the automobile industry, now faces a grim future as the former Stellantis CEO Carlos Tavares believes that the Elon Musk-led company may exit the car business and may even cease to exist within ten years, according to a report by Fortune, citing French newspaper Les Echos.
Tavares mentioned that the EV manufacturer faces stiff competition from Chinese competitor BYD, which overtook Tesla in worldwide EV sales earlier this year. As a result of this challenge and with several projects underway, CEO Elon Musk might shift his focus to other areas.
What did Carlos Tavares say about Tesla’s future?
“We can’t rule out that at some point, he’ll decide to leave the automotive industry to refocus on humanoid robots, SpaceX, or artificial intelligence,” Tavares was quoted as saying. “Elon Musk will have left the automotive industry,’ he added.
According to Tavares, BYD is giving tough competition to Tesla through cost-effective vehicles.
“I’m not sure that Tesla will still exist in 10 years. It’s an innovative group, but they’ll be beaten by BYD’s efficiency,” he said.
Notably, Tesla’s market share in China has dropped to around 5% from 16% in 2020, partly due to competition from BYD. Last year, Musk said, “Chinese car companies are the most competitive car companies in the world.”
Tesla’s challenges
The ex-Stellanties CEO’s remarks come after Tesla’s Billionaire CEO Musk dedicated much of this year to assisting US President Donald Trump in his role at the Department of Government Efficiency. He told Fox News at the time that he was managing his duties “with great difficulty.”
Meanwhile, the EV maker experienced supply chain setbacks, partly due to Trump’s tariffs and increased sales pressure after the EV tax credit was cut down in the US.
Need to incentivise Elon Musk
Tesla has continuously said that it requires Musk to be retained and rewarded to complete its long-term goals. A 10-year, $1 trillion pay package for the CEO, set for a shareholder vote on Nov. 6, is intended to incentivise Musk, while also building ambitious goals such as increasing the company’s market capitalisation by 500% to $8.5 trillion, the report said.
However, last month, two proxy advisory firms advised shareholders to vote against the pay package, partly because they questioned the board’s discretion in determining when and how Musk has achieved the specified targets. Tesla’s board denies this claim, the report said.
“This award aims to see Tesla grow larger than any company in history. Each and every operational milestone, including the product goals, must be validated by an extraordinarily ambitious—and sustained—increase in market capitalisation,” Tesla board chair Robyn Denholm’s statement was quoted in the report.
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