‘The reason is Elon’: Tesla investor blames poor sales on Musk’s X posts

Simone Del Rosario: Elon Musk has been described as ingenious, unorthodox, eccentric. And the bold things he’s done in life have gotten him and his companies where they are today. 

But are his antics now hurting his most prized accomplishment, Tesla? You know, the world’s most valuable carmaker that propelled Elon Musk to the richest person on the planet, albeit temporarily. 

Tesla Stock is down more than 30 percent this year. And the company just had a very disappointing quarter. Deliveries are down more than 8% year over year, the first quarterly decline in nearly four years. It’s also down 20% down from the previous quarter.

Tesla even briefly lost its title as world’s biggest EV maker to China’s BYD, but got that position back this week after BYD announced disappointing numbers of its own. 

All the while, total EV sales are expected to grow this year, so this doesn’t appear to be an EV problem. So what’s happening at Tesla? Market intelligence firm Caliber says the prospective buyer pool for Tesla is considerably shrinking. The percentage of consumers who say they would consider buying a Tesla went from 70% in November 2021 to as low as 31% in February of this year.

Caliber’s CEO told Reuters, “It’s very likely that Musk himself is contributing to the reputational downfall.” The survey found 83% of Americans associate Tesla with Musk, the highest CEO to company link in the country. 

Tesla investor Ross Gerber is joining me now Ross is the CEO and President of Gerber Kawasaki wealth and investment management. And Ross, your Tesla investment at the end of 2023? Was it nearly $100? million? Right? I assume it’s much less now.

Ross Gerber: Yeah, it’s much less, you know, from two reasons. One is we’ve trimmed our position, you know, fairly aggressively and then to obviously, the value of Tesla has fallen. So now our position is closer to about 50 million today.

Simone Del Rosario: Let’s get into those first quarter results. Before we get into anything else. Tesla has a lot of reasons why it was largely disappointing. They talked about the fire at Tesla’s Gigafactory, outside Berlin, the Red Sea disruptions, and then also ramping up production on that new model three, is that how you see the results?

Ross Gerber: No, I mean, I think you when you look at their production numbers, the estimates were already, you know, taking into account all those factors. And, and so estimates had come down substantially, I think what is most concerning to me was the gap between what they produced and what they delivered was the largest gap that I’ve seen, in my time with Tesla, you know, it used to be every car we made, we sold, it was like, it was no problem. So to see 50,000 cars not sold in the quarter, even after production was lower by substantial amount. That was what really set off my concerns.

Simone Del Rosario: And for you, what do you think is the main driver behind that?

Ross Gerber: Well, I know the main driver of it is that Elon Musk has become so polarizing that consumers are looking for other options than the best vehicle on the road, because they simply don’t want their values don’t align with Elon, and they don’t want to support it. And it’s an unfortunate, unfortunate byproduct of the Twitter acquisition.

Simone Del Rosario: Yeah, he’s always been an outspoken guy. But now that he owns X, he’s obviously speaking out about a lot more than just Tesla. How much does his behavior concern you moving forward? Can he continue to run these ships simultaneously?

Ross Gerber: So being outspoken is okay. I think when you’re outspoken, and what you’re saying is extreme and potentially anti semitic and racist. That’s extremely damaging in today’s day and age for the brand. And so I think we have to be very clear about nobody’s had a problem with Elon being Elon for all these years. But he’s now taken a position online publicly daily, where he’s attacking so many groups. I mean, he’s basically, you know, crying the, the poor white guy, you know, now, white racism or something. And it’s just absurd. And so it’s, it’s really hard for consumers to reconcile what Elon saying, and then go out and buy the car.

Simone Del Rosario: Yeah, let’s talk about these consideration scores that came out this week. To you. Does that mean that Musk is the person standing in the way of people buying a Tesla?

Ross Gerber: Yeah, 100%. Once again, we have the best software, the cars are performing amazing, they look great. They last forever. They’re cheaper than they’ve ever been. There’s a government discount to buy them. Like, why would you buy another car than a Tesla, essentially. And the reason is Elon, and so that’s the reason why consumers aren’t choosing the best car on the road. It’s literally the best car on the road by miles. And they’re choosing other cars because of Elon, and I think there’s just a reality we have to face. Politics is extremely polarizing today. And if you’re in business, and you get into politics with your opinions, it will hurt your business. And, and I’ve gotten out of it specifically for this reason, I really don’t comment on politics at all anymore. And I used to all the time.

Simone Del Rosario: It is interesting because Elon Musk is the one who talks about, you know, diversity and inclusion and ESG and those things hurting business, what about what he’s doing?

Ross Gerber: Right. And we all know that diversity and inclusion doesn’t hurt business. This is the most absurd argument I’ve ever heard. Okay, increasing the pool of qualified potential candidates has never hurt business. The fact is that we’ve limited our pools due to racism and other factors for so many years. That idea that we’re becoming more inclusive as a negative is literally opposite of reality.

Simone Del Rosario: I was going to ask you, if you still thought that Tesla was the best option on the block, obviously, you’ve already answered that for us. And I know that you do drive Tesla as well. It was interesting going back to these consideration scores I spoke to one of these would be Tesla buyers today, someone who really wanted a Tesla and is now completely turned off to buying a Tesla. He told me, it wasn’t Musk’s personality for him, but rather the self driving technology. He thought that as innovative as Tesla has been to this point, in his perspective, it’s now being lapped how much of this has to do with Tesla now having way more competition?

Ross Gerber: Well, I think that viewpoint is incorrect to full self driving technology on Tesla’s farm beyond better than any other technology, anything like it. In fact, it’s doing better today than it’s ever done. So I use it almost every day. The new version In a full self driving technologies excellent, but when you actually read about full self driving in the papers, all you see are bad things. And this is another byproduct from the poor management at Tesla, where they don’t spend any time money or effort to counter the FUD the false and misleading information that’s constantly being pulled out about full self driving software, and other elements of driving electric vehicle like range anxiety, which is also a main reason why people don’t choose EVs is they’re worried about charging, and yet Tesla has such a wonderful solution for this. So their lack of communication, they have no real marketing or PR department, and their lack of communication with the public certainly hurts their sales. 

Simone Del Rosario: Aside from that, what does Tesla need to do to turn this around for you, you say that you’ve been offloading, what would make it so that you’re like, you know, I’m backing on this company more than ever before?

Ross Gerber: Well, there’s really a combination of things that I laid out over a year ago that Tesla needs to do to build confidence with investors about the future. And the first is obviously Elon needs to stop, you know, being on Twitter every day and start running Tesla. If you look at his tweets, he basically spends no time talking about Tesla at all. It’s not even in his thought process. And so the fact that he’s CEO of the company is part of the problem. Now I’d like to have Elon back as a full time CEO of Tesla, but if he’s not willing to do it, it’s time for Tesla to move on. And it’s simple as that. He doesn’t have to be CEO, if he doesn’t want to be CEO, you know. So that’s the first thing we need to focus on who’s not on Twitter, attacking immigrants every day. Secondly, Tesla needs a marketing program, equivalent to any other major company like Apple, and they need to spend money, and they need to be aggressive. And they need to hire the types of marketing people, as well as PR people that can really help Tesla improve its image across the board, they need a crisis communications team right now as quickly as possible to get involved and start changing the narrative around Tesla. And then lastly, what they’ve started doing some of the things I been telling them do, which is give full self driving away, let consumers use it. And every person in my office that has a Tesla that’s never useful self driving, has come back and said, Wow, this is way better than we thought it would be. So the fact that after a year of me telling them that they should start giving the software away that they finally gave it away, it was actually a few days after I tweeted, just give it to people for three months, and then they finally gave it to people. This will help adoption and understanding of the technology. But this is crucially important technology to the safety of people, over 41,000 people died in American in car accidents last year, and it was down 5% from the year before. And the reason for this is driver safety technology. And so the more we implement driver safety technology, the more lives we’re going to save. And I think that message needs to be shared. And people need to see how great the technology.

Simone Del Rosario: Undoubtedly Ross, Elon Musk got Tesla to it highly successful level. But you just said he’s a part time CEO right now, what does the board need to be doing at this point to either get him situated in that chair or get the company moving in the directions that you mentioned? 

Ross Gerber: Well, there is no Tesla board in my mind. Tesla board is like the five fingers of Elon, you know, so essentially, no buddy represents Tesla shareholders. They all represent Elon, and there is no Tesla board essentially. Because what he says goes and they all live in fear of Elon. See, that’s the way it works at Tesla. Everybody lives in fear, very, very similar to Stalin or Mussolini type management system. So if you say anything that he doesn’t like, you’re fired, and that’s just the way it is. So nobody’s gonna say anything on the board and the board’s totally worthless that needs to be replaced. If it’s really going to be an independent run company. 87% of the shares are owned by institutions and individuals and they have zero representation right now.

Simone Del Rosario: Ross Gerber of Gerber Kawasaki, thank you so much for your thoughts today.

Ross Gerber: Thank you for having me.