GADGETS

In 2021, Tesla’s massive profits are offset by an ongoing crisis


At the end of 2021, Tesla is finding it richer than ever – and in CEO Elon Musk’s case, richer than anyone else. The electric car maker has set records for both deliveries and profits this year despite a global shortage of chips that has decimated supply chains around the world, effectively crippling the rest of the automaker’s production capacity. However, its financial successes have often been overshadowed by Tesla’s ongoing production quality problems, multiple NHTSA and SEC investigations, notable “full self-driving” system failures, as well as numerous vehicle recalls and delays for upcoming models. And with industry powerhouses like Ford, GM, Honda and Volkswagen Group making a concerted effort to electrify their own offerings, could 2022 be the year Tesla’s reign as top EV maker ends?

The good

2021 was, without a doubt, a remarkable year for Tesla’s dividend yield. The company entered this year having met its 2020 goal of producing half a million vehicles (499,550 of which were delivered to customers), nearly 133,000 units more than in 2019. By April, Tesla had produced a record number of 180,338 vehicles and delivered 184,800 of them. Demand has remained strong throughout the first half of the year, thanks in part to price cuts on both the Model 3 and the Model Y.

The company then broke the same record in July, building 200,000 vehicles over the past three months, and Tesla raking in $1.1 billion in net income over the same period. “The overall sentiment toward electric vehicles is at a tipping point, and at this point, I think almost everyone would agree that electric vehicles are the only way forward,” Musk said during his second-quarter earnings call.

Unsurprisingly, Tesla’s record-breaking trend continued unabated through the third quarter as the company pulled 237,823 vehicles off its production lines—almost all Model 3 and Model Y—and delivered 241,300 of them. The company also started taking pre-orders for the British version of the Model Y in October and announced that the Model Y for the Chinese market will receive the upgraded AMD Ryzen chipset.

Tesla closed out its stellar fiscal year with announcements from Hertz that it plans to order 100,000 cars (although there is no doubt about how that deal will actually go about) and from Uber Eats that it intends to lease up to 50,000 Tesla cars to its drivers.

bad

While Tesla has enjoyed unabashed sales success with its core lineup, the company has often struggled to meet release deadlines for a number of its yet-to-be-released models. Both Cybertruck and Semi have been postponed to 2022 while the Tesla Roadster is said to not arrive until at most 2023. Tesla has also taken a strange path by releasing a standard “entry level” Model Y range for only a few weeks before discontinuing the trim level. Similarly, Tesla has postponed its $130,000 Model S Plaid release to June 10, debuting just days after Musk unilaterally announced that the Model S Plaid+ had been scrapped altogether,

The company has also been hit by a wide range of production problems and vehicle recalls this year. In February, Tesla bowed to NHTSA pressure and recalled 135,000 Model X and S vehicles over faulty touchscreens. That same month, Tesla was forced to issue a recall of another 12,300 Model Xs due to loose panels. In April, customers reported that the company charged them double for their cars, up to $71,000 in some cases, although Tesla was quick to compensate affected buyers and even handed out a $200 gift certificate to the company’s store.

June saw another recall, this time for 6000 Model 3 and Ys on faulty caliper brake calipers, and in October, Tesla had to recall another set of Ys and 3 because its suspension kept breaking off. Just last month, the company had to pull nearly 12,000 cars across its production line due to software issues — not to be confused with a recent Tesla app outage that prevented drivers around the world from using their own cars.

Tesla’s crisis show has also extended to the production lines themselves as the Fremont plant faces a major COVID outbreak shortly after reopening in March. Musk complained often and loudly throughout 2020 about California’s quarantine laws, finally making good on his threats to take his toys and go home, and officially move Tesla’s headquarters to Texas in October.

The company was also ordered to pay former employee Owen Diaz $137 million after a jury in federal court in San Francisco found Tesla responsible for the irrational racial bigotry Diaz encountered while working at the Fremont plant. That lawsuit was followed by another, filed by Jessica Barraza in November alleging “rampant sexual harassment” as well as continued verbal and physical abuse while working at the Fremont site.

Tesla’s Full Self Driving beta also turns out to be a mixed bag for the company in 2021. After debuting in October last year, the 8.3 beta rolled out in May, doubling the size of the test program, before launching the 9 beta in July. The release of Version 9 coincided with a new FSD subscription program that costs customers $199 a month (or $99 a month if they’d previously purchased the now-defunct Enhanced Autopilot feature) — assuming they already have a $1,500 FSD computer installed in their car.

However, Tesla’s decision to ditch the radar-based autonomous sensors in favor of a visual-only setup in May led to a backlash from NHTSA that subsequently forced the company to remove some driver-assistance designations such as forward collision and lane departure warnings. In an effort to counter claims that using the autopilot feature can cause drivers to become unattentive and less responsive once they resume control of the vehicle, Tesla activated in-car driver monitoring cameras in late May.

The FSD beta 10 reached great fanfare in September with owners noticing smoother turns on city streets, improved display visuals and an overall improvement in the car’s mobility on highways. Those feelings didn’t last long when, in October, I was forced to back out of the 10.3 beta app after realizing “some issues” for each catch, including a “slope” with a left turn. Users have also reported phantom forward collision warnings and automatic steering errors.

The company’s FSD errors — which have been implicated in multiple incidents where Teslas inexplicably collided with first responder vehicles and other civilian drivers as well as widely reported wrecks in Houston with no one behind the wheel — have led to calls for more scrutiny to and from the NHTSA and NTSB, US Senate and even DMV in California.

The FSD feature also prompted a recall of 300,000 units at the request of the Chinese government regarding the ease with which FSD could be activated, although that wasn’t the only problem Tesla had with the nation. In April, China banned Tesla cars from its military bases and “major state-owned enterprises” over concerns that countless cameras in cars could be used for spying. After nearly a month of controversy and pleas on social media, Tesla has finally acquiesced to Chinese cybersecurity demands and set up a local clearinghouse for that data.

musk

And what would the year be in a Tesla review without a look back at CEO Elon Musk’s unique brand of hoaxes? Last October, Musk unilaterally dissolved Tesla’s public relations department, making his personal Twitter account the first, last, and only confirmation of the company’s decisions. Last January, Musk slightly reversed course, and instead of fixing the department, he started hiring people to respond to customer complaints made about him on the social media platform.

Speaking of the tweets, Tesla was also sued this year for allegedly violating a previous deal with the Securities and Exchange Commission by allowing Musk to continue sending unapproved “irregular” tweets as well as for the company’s failure to get impartial general counsel to control its CEO. The National Labor Relations Board also went after Tesla in 2021 and found that the company had illegally fired a union activist. Accordingly, the NLRB demanded that the worker be rehired and Musk deleted his 2018 union-busting tweet related to the case.

2021 was also the year Musk took a big turn towards cryptocurrency. Tesla bought $1.5 billion worth of stuff in February and briefly toyed with the idea of ​​letting customers use the currency to buy its cars, although those plans were quickly scrapped due to concerns about the environmental impacts of bitcoin mining. Musk also took some time out of his Saturday Night Live hosting duties in May to smash the value of Bitcoin competitor Dogecoin, though his subsequent tweets helped the Dogecoin price rebound somewhat.

And then there was the entire Tesla “robot” debacle, which I can’t even, I mean, was literally just an actor in a spandex suit dancing while Musk made a bunch of baseless claims.

What then

Looking back at 2022, it looks like Tesla is well on its way to continued success. The Gigafactory in Berlin is nearly ready to start production and is expected to do so by the end of this month – barring any unexpected setbacks. The company’s stockpile of chips and aggressive maneuvers to shore up supplies of raw materials for batteries will insulate Tesla from many of the production bottlenecks that many other electric car makers are likely to face throughout the new year.

However, even with Tesla’s record production numbers from the past two years, the number of vehicles it delivers annually is still a fraction of what the more well-known automakers sell. BMW, for example, sold 2.3 million vehicles worldwide in 2020. In the same year, General Motors sold 2.5 million vehicles in the United States lonliness. And as these companies increasingly turn their attention to the electric vehicle market while taking advantage of economies of scale that Tesla can’t match, Musk may soon find itself reverting to being an electric vehicle brand rather than an industry giant.

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