Elon Musk and Tesla owners are learning a harsh lesson about revaluation

Elon Musk and Tesla owners are learning a harsh lesson about revaluation

Investors nervous about Tesla’s future are unlikely to be reassured by the company cutting prices by as much as 20% on Thursday. In addition to angering customers who felt “cheated” after buying vehicles at previous prices, the move has many Tesla watchers upset about the revaluation and perceived missteps by both the company and its embattled CEO, Elon Musk.

Earlier this month, Tesla posted deliveries that fell short of Wall Street’s expectations, despite offering discounts to US consumers.

Brianna Wu, a software engineer and former congressional candidate, shared her thoughts in a Friday tweet on Tesla’s price cut and its implications.

Wu has been something of a thorn in Musk’s side. Last month, she dared him to post a poll on Twitter asking if people wanted him to step down as Twitter CEO amid his chaotic overhaul of the social network. He did, and most respondents said he should. He then promised to resign after finding someone “stupid enough to take the job”.

Musk’s declining fortunes

She also blamed him for the massive decline in his personal fortune in 2022, tweeting: “You worked hard this year and lost over 200 billion. I believe you will outdo yourself with even worse decisions this year.”

He replied, “Thanks for paying me $8,” in response to her having a Twitter Blue subscription service.

At the top of her tweet on Friday, Wu wrote: “Tesla cuts prices by $13,000 will destroy the company in the long term… To begin with, the profit margin for each car will fall, deeply affecting their revenue . Sales are expected to increase, but profits are much lower.”

She later added, “How does Tesla get their prices back on the flagship models? They don’t have any new cars in sight, They are selling a rapidly aging nine year old car and a five year old car. It costs hundreds of millions to bring new cars to market. It will be a cash crunch.”

For Tesla owners looking to sell their vehicles, the steep price cuts this week have been frustrating. One person who spoke to Fortune said he listed his 2018 Model 3 with the Full Self-Driving Beta software package for about $51,000 in December, but is likely to lower the price to $30,000.

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Tesla ‘horror story’

Wu also predicted an “overflow of cheap Teslas on the road” bought by people who may not be able to afford repairs, which could be prohibitively expensive in Tesla’s case. In late 2021, a customer blew up his Model S in a YouTube video rather than pay $22,000 to have it repaired.

She predicted “horror stories of working-class people buying these things, and having battery packs fail and not having $10-15,000 to fix.”

It’s not just Tesla customers who feel like they and their vehicles have been re-evaluated. Musk’s net worth is still tied to Tesla shares, which hit $400 in 2021 but are now below $130. Some Silicon Valley insiders predict an IPO for SpaceX’s Starlink this year, in part so Musk can give himself some “breathing room.”

In early December, Musk’s bankers were considering providing him with new margin loans backed by Tesla stock to replace some of the high-interest debt in his Twitter deal, Bloomberg reported at the time.

This resulted in Musk personally raking in billions when he bought Twitter and sold Tesla stock to help make it happen.

Last month on the All-In podcast, Musk reiterated his belief that the economy is overdue for a recession and said, “I would really advise people not to have margin debt in a volatile stock market and you you know, money-wise, keep your powder dry. You can get some pretty extreme things happening in a down market.”

Of course, Musk remains one of the richest people in the world, and he has sometimes played down his dramatic decline in net worth. On January 1, he responded with a shrug emoji to a post noting that he had lost $200 billion “but was still joking on Twitter.”

Fortune reached out to Tesla for comment, but did not immediately hear back.

This story originally appeared on Fortune.com

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