Investors nervous about Tesla’s future were not dampened by the company’s price cut of up to 20% on Thursday. Besides angering customers who felt “cheated” after buying their vehicles at the previous price, the move left many Tesla watchers bemoaning the revaluation and a perceived mistake from the company and CEO Elon Musk.
Earlier this month, Tesla delivered shipments 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 Twitter thread Friday about Tesla’s price drop and its implications.
Wu is something of a thorn in Musk’s side. Last month, he her courage to post a Twitter poll asking whether people want him to step down as Twitter CEO amid a chaotic revamp of the social network. They did, and the majority of respondents said they should. He later promised to resign if he found someone “stupid enough to take the job.”
Musk’s drop in fortune
He also ribbed against a big drop in personal fortune in 2022, tweet“You worked hard this year and lost more than 200 billion. I believe that this year you will surpass worse decisions.
He replied, “Thanks for paying me $8,” in response that he has a Twitter Blue subscription service.
At the top of his Twitter thread is Wu write“Tesla Lowering prices by $13,000 will damage the company in the long term…For starters, the profit margin on each car will plummet, deeply affecting revenue. Expect sales to increase, but income will decrease.
they added later“How does Tesla get the price again in the mainstream model? They don’t have new cars on the horizon, They sell nine-year-old cars that age quickly and five-year-old cars. It costs hundreds of millions to bring a new car to the market. It will be a cash crunch.
For Tesla owners looking to sell their vehicles, this week’s drastic price cuts are frustrating. That’s talking to fortune said he listed his 2018 Model 3 with the Full Self-Driving Beta software package for around $51,000 in December, but will likely cut the price to $30,000.
Tesla ‘horror story’
Wu also predicted “gluten cheap Teslas on the road” bought used by people who can’t fix them, which could be very expensive in Tesla’s case. In late 2021, one customer blew up his Model S in a YouTube video rather than pay $22,000 to fix it.
He expects “horror stories of working-class people who buy these things, and the battery pack fails, and they don’t have the $10-$15,000 to fix it.”
Tesla customers aren’t the only ones who feel like they and their vehicles have been revalued. Musk’s net worth is still tied to Tesla shares, which in 2021 will surpass $400 but are currently below $130. Some Silicon Valley insiders expect an IPO for Starlink SpaceX this year, in part to give Musk “breathing space.”
In early December, Musk’s bankers considered offering a new margin loan backed by Tesla stock to replace some of the high-interest debt on the Twitter deal, Bloomberg reported at the time.
Those who follow Musk personally made billions when he bought Twitter and sold Tesla stock to help make that happen.
Last month in All-In podcast, Musk reiterated his belief that the economy is overdue for a recession and said, “I really advise people not to have borderline debt in a volatile stock market and you know, from a cash standpoint, keep the powder dry. You can get some things going on.” which is extreme in the down market.
Of course, Musk remains one of the richest people in the world, and he’s not even aware of his dramatic net worth. On January 1, he he replied with a shrug emoji to a post stating that he will lose $200 billion “but still make jokes on Twitter.”
fortune Tesla reached out for comment but did not receive an immediate reply.
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