What Happens to Elon Musk and Electric Cars if Tesla Dies?
Tesla had a rough 2022 – to say the least.
Everything from the economy, to inflation, to the Russian invasion of Ukraine, dealt body blow after body blow to the electric car maker – and the rest of the tech and automotive industry in general. However, the recent actions of the company’s CEO, Elon Musk, following his hesitant purchase of Twitter, have only dragged the beleaguered Tesla further into the deep trenches of a financial crisis. In fact, Tesla has lost nearly 70 percent of its market cap year to date.
It’s a change from a year ago, when the company, valued at $1 trillion, seemed to do no wrong. Some are questioning Musk’s leadership, while others are going further — speculating that this could just be the beginning of the end for Tesla.
There’s no denying the impact the company has had on both the production and sales of electric cars. Ultimately, it did something that once seemed impossible: convince the public that EVs are, in fact, pretty cool. Now the legacy automakers are playing catchup to get customers to buy their electric car models.
Tesla revolutionized the way the world sees and drives EVs—but with its back against the wall and a financial situation looking increasingly bleak by the tweet, we could soon find ourselves in a situation where the biggest name in the game has lost its guts up.
Let’s be clear: there is a pretty low chance of this happening… but what if it does?
How to make (and burst) an EV bubble
To understand the impact Tesla’s demise would have on the future of electric vehicles, it’s important to wrap our minds around how exactly we got here.
“I give a lot of credit to Elon Musk. He almost single-handedly made electric vehicles glamorous and sexy,” Ragunathan “Raj” Rajkumar, a professor of electrical and computer engineering and autonomous vehicle researcher at Carnegie Mellon University, told The Daily Beast. “People connected with the person who was transforming the auto industry and doing the right thing for the planet.”
However, this was a double-edged sword. Musk hyped Tesla with lofty, if slightly unrealistic, promises and tweets. He cultivated an army of Elon stans willing to go to war for him online to protect his companies from smaller ones. Meanwhile, the cars were finally selling well. All of this resulted in the perfect mix to propel Tesla’s stock into the stratosphere like many SpaceX rockets.
“If Tesla collapses and they’re completely out of business, I believe there will be street dancing at every giant [automaker] on the planet.”
– Sandy Munro
But the value was always tenuous at best. It’s not like other automakers wouldn’t ever make electric cars. Thus, Tesla’s market cap became a bubble of epic proportions.
One of the people holding a needle was Musk himself – which he ended up buying his favorite social media platform, Twitter.
“It was just a complete bubble,” Rajkumar added. “At the end of the day, business must be business. Sooner or later, things that go up have to come down, and that’s what we’re seeing and will continue to see.”
There are also fundamental economic factors. Demand is low across the board due to a weak economy. Plus, the market looks a lot different than it did a year ago. Tesla is no longer the only horse in the race. The EV industry is much bigger now, and with increased competition, it was really only a matter of time before Musk’s company started feeling the pressure.
That feeling is stifling: Elon Musk’s takeover of Twitter inadvertently caused further turmoil and instability for Tesla’s finances.
A world without Tesla
Given Tesla’s profound influence on the automotive industry and consumer habits, there’s really no question that it would have a profoundly negative impact on the future of EVs.
“If Tesla collapses and they’re completely out of business, I believe there will be street dancing at every giant [automaker] on the planet,” Sandy Munro, an independent automotive engineer, consultant and industry expert, told the Daily Beast.
Munro is known for his famous wrecking reports that provide incredibly detailed analysis of various vehicles. His glowing review of Tesla’s 2020 Model Y found him not only positive about the future of the company, but also about electric vehicles in general. A few years ago, he predicted that electric vehicles would account for more than 50 percent of all vehicles on the market by 2030. Due to Tesla’s success, he has updated this prediction to 2028.
However, Munro admits that, if Tesla ever went bankrupt, none of the predictions would ever happen and he would “definitely walk away from EVs.”
That’s because, he says, Tesla’s downfall would put the proverbial fire under any legacy automaker’s asses to turn to new, emerging technologies — and instead, encourage them to return to the old ones. There would no longer be a push to build new plants and devote so much of their R&D resources to batteries, charging stations and powertrains. Even regulators would have much less incentive to make changes to the nation’s transportation and energy infrastructure.
Overall, we will see a return to our greenhouse gas emissions. “If Tesla goes out of business, you see how fast the Keystone pipeline goes,” Munro added.
Rajkumar’s rating is not that terrible. He believes that the technologies and innovations that Tesla has championed will eventually continue. After all, consumers already want EVs more than ever—and that number is only expected to grow. Even car companies see this, and are ready to exploit it.
“The global automotive industry has put an emphasis on EVs now and many companies are publicly announcing that they will switch to an all-electric product line. I don’t think it will stop anytime soon,” said Rajkumar. However, he admits that it is not clear whether many of the goals outlined by these automakers are realistic due to an inadequate charging infrastructure and a slow rate of EV adoption by consumers in general.
The only real winner to come out of Tesla’s demise would be China. The country is already making a concerted effort toward electrifying its transportation infrastructure, with goals for 40 percent of all vehicles sold in the country to be EVs by 2030 and to have enough charging stations to serve more than 20 million vehicles.
Munro said this could cause a kind of tortoise-and-hare geopolitical situation, with China playing catch-up and soon advancing far beyond the Western world, eventually eclipsing the sleepy US with technologies like EVs that will be vital to our collective future.
“China will survive,” Munro explained. He added that we could get to the point where the US has relatively few EVs because we were so focused on short-term profits.
Workers work on the electric vehicle assembly line at a factory of Dayun Automobile Co., Ltd on December 8, 2022 in Yuncheng, China’s Shanxi Province.
Tesla will die another day
The future may look a little uncertain for Tesla — but it’s likely to survive its current slump. Sure, it might not reach the $1 trillion zenith it hit last year (at least for a while), but it sure will figure it out.
“There’s no way Tesla is going belly up,” Munro said. “It’s just not going to happen.” He added that there are two main factors why the company will continue to move forward.
The first is actually Musk. While many may be troubled by his antics on Twitter (Tesla’s chief stock investors among them), there’s no denying that he helped revolutionize and champion many of the industries the world will rely on him the most. the future: electric cars and space travel. . If he can pull himself back from the social media albatross he has wrapped around his neck, he may be able to help lead Tesla through a rapidly crowded electric vehicle market and beyond 2030.
The second, Munro said, is the children. Yes, child. He believes that children – more than any other market indicator, stock trend or consultant McKinsey – accurately point the way to the future of things like automobiles and, by extension, Tesla.
“If you talk to kids, you suddenly find out what they don’t like,” he said. “I don’t like the smell of gasoline. I don’t like the black smoke coming out of the car. I want to do more for the environment’. That’s why I don’t think Tesla will go away.”