▲Professor Kim Pil-su, Department of Future Automobile Engineering, Daerim University

“Tesla’s Fall, Can It Resurrect?”

Concerns about price cuts and FSD false advertising, inevitable damage to corporate image
Key strategies required to overcome the electric vehicle chasm and secure competitiveness

Tesla is an icon of electric vehicle innovation.

As the era of electric vehicles has truly arrived, Tesla has been synonymous with innovation, pioneering new areas including electric vehicles over the past decade.

Starting with SpaceX, it has established itself as a leading name in establishing various future mobility, such as Hyperloop, a bullet train that challenges the speed of sound, and has established itself as a company that everyone wants to be like.

Among them, Tesla can be said to be dominating the global market as a leading electric vehicle company.

But currently, a dark shadow is looming large.

Negative views on the market have grown as most markets, including China, the US, Japan, and Korea, have lowered their selling prices by as little as 10% and as much as 20%.

Even at Tesla stores in China, there were complaints from consumers who had purchased the car at the previous full price, with prices being lowered to as low as 16 million won. It got so serious that it even led to scenes of stores being destroyed.

Since the latter half of last year, with the so-called chasm phenomenon appearing, where electric vehicle sales have been rapidly declining, a full-scale sales war has begun to increase the cost-effectiveness of electric vehicles.

As the importance of so-called 'half-price electric vehicles' grows, the movement to lower prices is gaining momentum, especially among Chinese electric vehicles, and Tesla is no exception.

In the past, Tesla had been steadily raising prices to build its brand image and position itself as a vehicle that was difficult for just anyone to access, creating an opportunity to emerge as a premium electric vehicle manufacturer.

However, the recent sharp decline in sales prices has significantly damaged its image, and even the used car market is showing an endless decline in stock prices.

Tesla is not a very high-quality vehicle when judged as a whole.

There were many complaints as various problems were exposed as a startup, not a global manufacturer, was manufacturing the car.

As autonomous driving functions are carried out with eight cameras, concerns about indiscriminate acquisition of various information from the surroundings have grown, and problems have also emerged, such as China taking measures to prevent entry into public institutions and Taiwan banning entry to the Ministry of National Defense.

Because it is not clear what information is obtained and sent to the US headquarters via satellite.

Even when the power goes out, safety issues are continuously being raised, such as the inability to escape through the back door of Model 3 and the need to find handles in different locations for other doors.

This means that in an emergency situation, the golden time may be shortened.

Also, the autonomous driving function 'Auto Pilot';The term 'Full Self Driving (FSD)' has also been the subject of controversy, with a previous German court raising concerns over false advertising and a ban in Los Angeles, USA.

Recently, it has also been investigated for false advertising of FSD.

This is because, despite the fact that it is not yet fully autonomous, it poses a serious safety threat to consumers due to excessive promotion.

In addition, since they only sell online, there is a severe shortage of service centers in each country, and they are receiving a lot of criticism for not only their lack of service spirit towards consumers, but also their lack of social contribution to the local community.

Nevertheless, the reason Tesla vehicles have become so popular is that they are popular among the younger generation because they allow real-time wireless updates through OTA (Over The Air) and give priority to autonomous driving functions.

It is a preview of what future mobility will look like.

But Tesla's popularity doesn't seem to be what it used to be.

Naturally, as vehicle sales dropped significantly, prices were drastically lowered in a push-out fashion.

There could be many reasons.

First of all, as I have emphasized in columns and other media for several years, Tesla’s dominance is not what it used to be.

Just a few years ago, global manufacturers were focusing on maximizing profits by selling internal combustion engine vehicles rather than electric vehicles that were not yet mature, but recently, as the electric vehicle trend has grown, they have entered the electric vehicle market in earnest.

Accordingly, the level of electric vehicles produced by global manufacturers has significantly improved, and the technological gap with Tesla has also widened. We entered the Spring and Autumn Period and the Warring States Period, which were both periods of great prosperity.

In other words, as consumers have more choices, there is less reason to buy expensive Tesla vehicles.

Here, as high-quality, mass-market Chinese electric vehicles are flooding the global market, the US is imposing a 100% tariff on Chinese electric vehicles, and even in Europe, where tariffs are 10%, there is a movement to impose higher tariffs on Chinese electric vehicles, indicating that there is a movement toward self-interest and protectionism in the global market.

As a result, Tesla's room for maneuver is becoming narrower.

Secondly, this marks the sixth year since Tesla's new model was released.

The new car effect cannot be overemphasized.

Although the Cybertruck has been released, it is still limited to small-scale production and is only available in the United States.

The problem is that new cars are still not available overseas.

The Cybertruck itself is in an even more dilemma as opinions are divided.

While other global manufacturers are tempting consumers by releasing a variety of internal combustion engine vehicles, hybrid vehicles, electric vehicles, and hydrogen-electric vehicles, Tesla is only producing electric vehicles and is facing serious disqualification as it has not even released the new vehicles it promised.

Tesla CEO Elon Musk said he would announce a level 4 robo-taxi on August 8, but there are doubts about whether this will actually be a breakthrough in this crisis.

Tesla is making various efforts to tighten its belt, such as lowering prices and reducing the number of charging infrastructure personnel, to continue the reputation it has built, but it is unable to return to its former status due to rapid pursuit by competitors.It is not easy to climb up to the top.

The aforementioned advantages of Tesla include the fact that many global manufacturers are already conducting real-time wireless updates such as OTA, and zero-emission vehicles with the best hardware and software, such as autonomous driving functions such as lidar, are beginning to appear, eliminating differentiation.

Tesla will need to tighten its belt once again with an innovative attitude, as it will be difficult to secure a unique position without differentiation and specialized elements.

In particular, as there have been many comments saying that Tesla's social contribution has been low in many countries, I hope that this will be an opportunity for Tesla to make a solid comeback and be reborn as a beloved company.

This is a time when a core strategy is essential to overcome the expected slump in the electric vehicle industry over the next 3 to 4 years and to secure competitiveness.