Investors nervous about Tesla’s future were not likely assuaged by the company slashing prices as much as 20% on Thursday. Aside from angering customers who felt “duped” after buying vehicles at earlier prices, the move has many Tesla watchers sulking about revaluation and the perceived miscues of both the company and its mercurial CEO Elon Musk.
Earlier this month, Tesla posted deliveries that fell short of Wall Street’s expectations, despite offering discounts to U.S. consumers.
Brianna Wu, a software engineer and former congressional candidate, shared her thoughts in a Friday Twitter thread on Tesla’s price slashing and its implications.
Wu has been something of a thorn in Musk’s side. Last month, she dared him to post a Twitter poll asking if people wanted him to resign as Twitter CEO amid his chaotic revamp of the social network. He did so, and a majority of respondents said he should. He then promised to resign once he finds someone “foolish enough to take the job.”
Musk’s drop in fortune
She also ribbed him over his massive drop in personal fortune in 2022, tweeting, “You worked hard this year and lost over 200 billion. I believe that this year you will surpass yourself with even worse decisions.”
He replied, “Thanks for paying me $8,” in response to her having a Twitter Blue subscription service.
Atop her Twitter thread Friday, Wu wrote, “Tesla lowering prices by $13,000 is going to devastate the company in the long term…For starters, the profit margin on each car is going to plummet, deeply affecting their revenue. Expecting sales to be up, but earnings way down.”
She added later, “How does Tesla get their prices back up on mainstream models? They don’t have any new cars on the horizon, They are selling a rapidly aging NINE-year-old car and a five year old car. It costs hundreds of millions to bring new cars to market. It’s going to be a cash crunch.”
For Tesla owners looking to sell their vehicles, the steep price cuts this week have been frustrating. One who spoke to Fortune said he listed his 2018 Model 3 with the Full Self-Driving Beta software package for around $51,000 in December, but would likely cut the price to $30,000.
Tesla ‘horror stories’
Wu also predicted a “glut of dirt-cheap Teslas on the road” purchased used by people who might be unable to afford repairs, which can be notoriously expensive in the case of Tesla. In late 2021, one customer blew up his Model S in a YouTube video rather than pay $22,000 to repair it.
She anticipated “horror stories of working class people buying these things, and having the battery packs fail, and not having $10-$15,000 of cash to fix them.”
It isn’t just Tesla customers feeling like they and their vehicles have been revalued. Musk’s net worth is still tied to Tesla stock, which in 2021 topped $400 but now sits below $130. Some Silicon Valley insiders anticipate an IPO for SpaceX’s Starlink this year, in part so that Musk can give himself some “breathing room.”
In early December, Musk’s bankers were mulling providing him with new margin loans backed by Tesla stock to replace some of the high-interest debt on his Twitter deal, Bloomberg reported at the time.
That followed Musk personally putting up billions when he purchased Twitter and selling Tesla shares to help make it happen.
Last month on the All-In podcast, Musk reiterated his belief that the economy is overdue for recession and said, “I would really advise people not to have margin debt in a volatile stock market and you know, from a cash standpoint, keep powder dry. You can get some pretty extreme things happening in a down market.”
Of course, Musk remains one of the world’s richest people, and he has at times made light of his dramatic drop in net worth. On Jan. 1, he replied with a shrug emoji to a post noting he’d lost $200 billion “but was still making jokes on Twitter.”
Fortune reached out to Tesla for comment but did not receive and immediate reply.
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Steve Mollman
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