How Much Goodwill Can Tesla Afford To Lose?

Uber has partnered with Google’s Waymo to facilitate robotaxi rides around Austin in advance of the city’s annual SXSW Festival. This development, occurring in Tesla’s own backyard amid a slowdown in sales, is quite interesting to me. Tesla has long enjoyed a huge first-mover advantage and an enormous amount of goodwill. First-mover advantages usually fade over time. Goodwill, in my experience, can disappear a lot faster.

I don’t love starting The Morning Dump with a question, but this is an important one and I don’t have a definitive answer to. It’s not that I think the market for Teslas will suddenly evaporate. The company could lose a huge percentage of its sales and still be the most popular electric car company in many markets. I’m just curious about how much of the company’s value is the hype and how much that hype is dependent on a never-ending string of good news and Musk pronouncements. Tesla, historically, gets a way higher valuation than other car companies and it’s not just because of the underlying business fundamentals.

Corvette is in a different situation. I don’t think esteem for the brand has lessened, but its original owners are aging out of the brand a little bit. What’s Corvette’s plan to keep itself fresh? Stellantis is a brand whose perceptions have definitely changed, and its big move is to become more American. That seems wise to me.

Oh, yeah, we’re in day two of tariffs. I don’t know how long they’ll last and there are some hints out there that, no matter what was said last night, the country might move past them quickly. Or at least modify them. Will this matter? I think the uncertainty is worse than any tariff right now.

The One Lever Tesla Can’t Pull Is The One It Might Need Most

Tesla CEO Elon Musk typically does some of his best work when his back is against the wall. I’m old enough to remember when it seemed like Tesla was going to have trouble delivering the company’s first production roadsters to customers and Musk had to rally customers, suppliers, and employees to get the product out the door.

It was hard then not to cheer for Musk. If you just started paying attention to the company and its leader, this enthusiasm for Musk might seem odd. At the time he was rich, but he wasn’t the richest man in the world. He was active on social media, but he didn’t own a platform. His politics were vague.

After years of hearing that American car companies were slow, old-fashioned, and unable to meet the demands of a new world, it was encouraging to see a company from the USA fundamentally alter the car industry forever.

Musk did have his own eccentricities. I remember covering his reaction to a questionable test from Top Gear and then a poorly planned road test someone at The New York Times did in a Model S. Musk’s response then was to refuse to budge an inch, threaten to sue, and otherwise get really mad. I remember writing at the time that I thought Elon Musk was turning a bit paranoid and Nixon-like.

None of this harmed Musk in the long run, as his was the only company in the world making truly great electric cars, and he benefited, both in esteem and in personal wealth, from getting there first. People were proud to be not just Tesla owners, but also Tesla shareholders. Even before Musk bought Twitter and turned it into X, he generated an almost cult-like adoration from a certain kind of extremely-online dude.

There are not enough of those online dudes to support a car company. Tesla’s goals have a lot more to do with driverless cars and other technology than they do with just selling a cars, so maybe that’s not a big deal, but Tesla still needs people to believe in the Tesla experiment or the high stock valuations that make him the richest man on the planet aren’t sustainable.

What if only the small segment of true believers are still on board? How long would it take to find out?

It’s hard to say if Tesla’s drop in sales in the United States, and especially in places like California, are explicitly because people take issue with any of the dozens of things that Elon Musk has done to make them upset. I don’t feel like I need to list them specifically because you’re getting your news from a blog so I assume you have the Internet, but just to pick the most recent thing: Musk’s Department of Government Efficiency is firing a bunch of people, and outlets across the country are pointing out that means he’s firing a bunch of disabled veterans. You might believe there’s a good reason for that, and perhaps there is, but it doesn’t feel good. Right? It’s hard to put that on a bumper sticker.

In Europe, where EV sales are exploding and Tesla sales are cratering, I think it’s much easier to draw a line between Musk’s politics and the sales drop. The support for the far right is growing in Europe, but it still represents less than a third of the population in the largest car markets, and talking to friends and relatives in Europe, it’s clear that those not associated with the far right absolutely despise the far right.

So what about China? Things can go poorly in Europe and the United States, but a big year in China could cover for a lot of it. Unfortunately for Tesla, things aren’t going well in China. In the first two months of the year, the brand saw a 30% decrease in sales from 132k cars to about 94K. Is this just the factory closing and the usual Chinese New Year Holiday as some suggest?

Not once did they mention the production transition from the old Model Y to the new Model Y, which temporarily results in fewer cars to sell. pic.twitter.com/2VAcszaQjG

— Sawyer Merritt (@SawyerMerritt) March 4, 2025

It’s certainly part of it, but China celebrated Chinese New Year in 2024 as well (obviously). Plus, other automakers in China are doing just fine, and according to CNEVPost, NEV sales in the country are way up this year:

Retail sales of new energy vehicles (NEVs) in China continued to see a sequential decline in February, though the rate of decline narrowed significantly.

In February, retail sales of passenger NEVs in China totaled 720,000 units, up 85 percent year-on-year, but down 3 percent from January, according to preliminary data released today by the China Passenger Car Association (CPCA).

Chinese New Year always throws a kink in sales, but this year the kink wasn’t as pronounced as in the past. Granted, I don’t think people in China are anti-Tesla in any specific way, merely that the competition there is truly amazing and the company can only cut prices/hand out insurance deals for so long before its margins get so bad that it can’t uphold its high valuation.

Tesla says robotaxis are coming. Eventually. It’ll have to get approval in California to do it there and my guess is that California might not go out of its way to help, given that the company moved its HQ to Texas.

And what of Texas? Well, Uber and Waymo just linked up to start offering rides there as CNBC reports:

Austin is the first market in which Uber will manage and dispatch a fleet of Waymo vehicles. Riders in Phoenix can book Waymo rides through the Uber app, but the ride-sharing company does not manage the Waymo fleet in that market. The two companies’ partnership will expand to Atlanta later this year, where Waymo employees have already begun taking fully autonomous trips across the city, the company said Tuesday.

Uber sold off its autonomous vehicle, or AV, unit in 2020 after a string of earlier safety incidents including one fatality. The two companies have not disclosed how they split revenue for Waymo rides booked through the Uber app.

“With Waymo’s technology and Uber’s proven platform, we’re excited to introduce our customers to a future of transportation that is increasingly electric and autonomous,” Uber CEO Dara Khosrowshahi said in a statement.

Now it’s Tesla that has ceded the first-mover advantage. It’s entirely possible that Tesla’s technology is way better than Google’s, that the cars will be nicer, and Elon Musk will come up with some genius marketing scheme to get people to buy the cars. Perhaps the idea of owning a car that you can allow to go do cab rides while you sleep is a great idea that people will love.

But here’s the thing that would scare me if I’m a Tesla investor: What if they don’t? What if Tesla is now toxic to enough people in big cities that you can’t get people to buy and/or use the cars? Then what’s the value of the company? People are already selling their Teslas in small numbers because they’re tired of being judged by their neighbors. There’s blood in the water.

Musk may not even be the most conservative or Trump-supporting CEO in the car world, but he’s made his brand so explicitly political that it’s now impossible to separate the two. How is Musk going to overcome that?

As I wrote almost exactly 12 years ago:

Tesla, in my opinion, has benefited from more goodwill and trust than almost any other automaker in the last decade. If that stops it’s not going to be the media’s fault, it’s going to be Musk’s.

There will always be a market for Teslas. It would be silly to suggest otherwise. The market has to be huge, though, for Tesla to be valued the way Tesla is. If sales fall to a low enough point, the company isn’t a unicorn, it’s just a horse. Horses are cool, too, but they aren’t as valuable as unicorns.

What Happens When Corvette Owners Are Too Old For Their Corvettes?

Oh, another question, fun. As was pointed out in our Discord, the short answer is: They get sold in an estate sale to some kid in their 20s. There’s a lot of conversation around the industry about the future of Corvette and this story in the Detroit Free Press addresses it pretty head on:

Corvette enthusiasts such as Detroit resident Mahlon Cooks, who retired from a Wayne County job after 30 years, may not be in the market much longer.

Cooks’ most recent purchase, an eighth-generation Corvette, may be his last, he told the Free Press.

“Heck, I’m 70 years old,” he said. “The car is about 4 inches off the ground.”

I think that’s reasonable, although the percentage of Corvette owners above 55 has dropped from 62% to 59% since 2019. This might both be a reflection of the introduction of a mid-engined Vette and also, maybe, some owners aging out of the brand.

These questions are also coming up because three of the executives closely associated with the brand have left the company. One retired by choice, and two seem to have been retired by GM. This has bothered some of the faithful, especially as it comes right as the company is about to roll out the 2025 Corvette ZR1.

I’m less bothered, to be honest. If Corvette is to remain America’s premiere performance brand, it’s going to have to change, which usually means an injection of new blood. This doesn’t mean that Corvette loses the core of what Corvette is. I’m pretty sure that GM President Mark Reuss is going to let that happen any time soon (he may eventually move on to head up the company’s F1 program, but he’s there now).

The youngest among us, Griffin, proudly drives a C6 Corvette. There’s still enthusiasm out there and it’ll just take a fresh look to make sure that Griffin wants to buy a new Corvette when he can afford one.

Stellantis To Become A Little More American

The Stellantis of Carlos Tavares, not pictured, was a very European company. People I knew involved with the automaker complained that the Tavares version of the company was a little too French. That’s no longer going to be the case as the Stellantis board moves to put two Americans onto its largely European board of directors.

From The Detroit News:

Stellantis NV on Monday nominated two Americans, Alice Schroeder and Daniel Ramot, to join its board that currently includes a large membership of European business leaders.

The transatlantic automaker also proposed reelecting five other directors, as the terms of seven members of the 11-seat board come to an end.

The directors will serve two-year terms if approved at an April 15 shareholders meeting in Amsterdam.

Schroeder is a former Morgan Stanley managing director who sits on several boards, including HSBC North America, and was once Warren Buffett’s biographer. Ramot is an Israeli-American entrepreneur and scientist who leads Via — a public transportation and software company that has ties to Stellantis Chairman John Elkann and his family’s investment company, Exor NV.

This is almost certainly a big improvement for the board as America, last time I checked, is still the company’s most important market.

The Uncertainty Is Worse Than Any Tariff

President Trump seemed to double down on his tariffs in his speech last night, which seem mostly bad for the industry. He did add the idea of being able to deduct the interest from car loans, which the car industry would probably like to see happen, although it’s not a huge amount of money unless you’re buying a super expensive car. Probably not enough to push anyone above the standard deduction.

How long will the tariffs last? It’s anyone’s guess, though there are some signs that maybe cars will be exempted in some way according to Reuters:

President Donald Trump’s administration is considering granting relief from his 25% tariffs on Canadian and Mexican imports to products that comply with the trade pact he negotiated with the two U.S. neighbors during his first term, Commerce Secretary Howard Lutnick said on Tuesday.

Two sources familiar with discussions between the Trump administration and Canadian and Mexican officials said the talks are aimed at exemptions for companies that comply with the 2020 U.S.-Mexico-Canada Agreement’s rules of origin, largely – but not exclusively – aimed at automakers.

That’s great if you’re a carmaker, but the whiplash from being told you’re going to have to build EVs to being told you shouldn’t build EVs is a lot. And then add on top of it that President Trump laid out the rules for building cars in the 2020 USMCA agreement only to toss them immediately upon being reelected.

How do you plan for that? Here’s a bit from Cox Auto’s Senior Economist Charlie Chesbrough that I think is key:

“Through much of 2024, many of the key metrics for the auto industry were returning to long-established norms. New-vehicle inventory had mostly recovered from the pandemic shortages; sales volumes and incentives were both increasing, as expected. And while new-vehicle prices are elevated compared to 2019, new vehicle price inflation was relatively tame in 2024, with transaction prices in January 2025 below levels measured in January 2023. But here we go again. Just as the industry seemed to be finding stable ground, new obstacles are thrown in place. How long higher tariffs are held in place is the industry’s big question right now. Higher prices and border disruptions could result in lower volume. Our forecast of 16.3 million new-vehicle sales in 2025, at least at this moment, is now in question.”

Building cars is hard, but it didn’t used to be this hard.

What I’m Listening To While Writing TMD

Here’s French cover artists Nouvelle Vague doing their version of Echo And The Bunnymen’s “The Killing Moon” just so people don’t think we’re anti-French around here.

The Big Question

Would you consider buying a Corvette?

Photo: Waymo