Elon Musk, Tesla stock and the Twitter problem

It’s the day before Thanksgiving, and Tesla is in trouble. Shares for the electric car maker have fallen more than 50 percent since the start of the year. And now, the company’s mercurial CEO, Elon Musk, is distracted by his shiny new $44 billion toy: Twitter.

Tesla has long benefited from a sterling reputation, both as a luxury EV maker and an investment opportunity. Yet the company’s problems are mounting, and more customers and shareholders seem to be taking notice. In recent weeks, several posts have been critical Tesla’s build quality Social media has drawn attention, and tens of thousands of Tesla vehicles have been hit with recalls. (Over-the-air updates will fix problems with the vehicle’s tail lights and front passenger airbags, two recent calls issued by the company.) So while Musk is busy firing up Twitter — and running his other companies, SpaceX, Boring Company, and Neuralink — Tesla Reputation seems to be taking a hit.

Let’s start with the musk itself. In the wake of his Twitter acquisition, some experts and analysts are concerned that Musk’s new job could dilute his responsibilities as Tesla’s CEO and contribute to its cratering stock price. Keep in mind that Musk financed most of his Twitter acquisition deal by selling his own Tesla stock, and approved more than 50 Tesla engineers to work at Twitter when he took over last month. At the same time, Tesla is currently facing a lawsuit alleging that Musk’s compensation package in 2018 was improperly influenced by the Tesla board’s personal relationship with Musk. (The lawsuit also calls Musk a “part-time CEO”.) Several lawsuits have been filed against the company related to its workplace, including allegations of sexual harassment, racism, and a “toxic” workplace culture, over the past year.

The car is also having problems. Build quality has drawn constant criticism of Tesla, and a reliability study published this month by Consumer Reports found the company has issues with its body hardware and steering system, among other issues. Tesla’s repairs remain a major hurdle, as a Recode investigation highlighted this past summer. The challenge is so significant that GM claimed in a recent investor presentation that its dealers have apparently repaired more than 11,000 Tesla vehicles since last year. A TikTok video documenting a Tesla’s build quality, including a wobbly trunk lid, received more than 4 million views earlier this month.

Steven Elek, data analyst at Consumer Reports, said in a statement, “Build quality has been an issue for Tesla. In our recent reliability survey, owners reported problems with body hardware and paint and trim on the Model S, Model 3 and Model Y. Tailgates don’t close properly, loose trim and trim, and faded paint are typical. We’ve heard from Tesla owners about the defects.”

Then, there are Tesla recalls, which total 19 since the start of this year (GM has issued 25, and Ford has issued 63, for reference, although they make many more cars). In addition to last week’s recall, the company issued a recall to some vehicles in November for their power steering and other vehicle problems that may have ignored stop signs in February.

Many of these recalled vehicles were issued without facing extensive safety issues and did not require physical modifications to their vehicles. Instead, they are managed via over-the-air updates, which allow Tesla to make necessary repairs, essentially, via Internet downloads. These fixes are obviously easier to complete than taking a vehicle in for repairs or replacing it entirely. Yet, as Recode has previously explained, such recalls — because they’re so easy to address — can also create a cycle in which regulators are constantly racing to catch dangerous software.

Tesla’s plan to become a self-driving car company doesn’t seem to be going so well. Elon Musk is still touting Tesla’s so-called full self-driving software — a beta version of the company’s system that is supposed to be available to more Tesla owners by the end of the year — even as other companies shy away from their autonomous car ambitions amid the economic downturn. this year

And now Tesla is facing another lawsuit, filed in September by owners who say Musk misled customers about how far along the technology is and how effective it is. The government has also gotten involved: Reuters reported in October that the Justice Department was investigating Tesla’s technology and that the Securities and Exchange Commission had also opened an investigation. At the same time, an initiative called the Dawn Project called for a ban on Tesla’s self-driving software entirely. To support that effort, the project released videos and ads intended to highlight the dangers of Tesla’s technology, including a television campaign showing a Tesla knocking over a children’s book. The carmaker recently sent a cease and desist letter in response.

Oh, and Tesla’s competitors are starting to pose more of a threat. While the company is still the darling of the nascent EV industry, companies like Ford and GM are racing to overtake Tesla and ramp up production. Startups like Lucid and Rivian are also trying to beat Elon Musk’s cars in the luxury market.

These companies probably don’t mind that Musk is currently spending his time rehabilitating Donald Trump’s Twitter account and posting memes, because they can use the time to catch up. As Recode editor Adam Clarke Estes wrote when news of Musk’s acquisition was first announced: “But if ever there was a time to start working on the head, it’s now. Tesla’s boss is away. Time to play.”

This story first appeared in the Recode Newsletter. Register here So you don’t miss the next one!