Tesla’s EV success made it ‘Magnificent.’ It could also be its downfall.

Tesla’s EV success made it ‘Magnificent.’ It could also be its downfall.

If an autonomous future was one pillar supporting Tesla’s (TSLA) “Magnificent” market valuation, an electric car cheap enough for most families was the other.

But changes from inside the company and from outside forces are swiftly complicating that vision.

Tesla’s stock price is predicated in part on mass-market EVs and leading the paradigm shift in how most of the country gets around.

But sky-high costs for autos — and especially EVs — have dampened consumer demand and extended any timelines for adoption.

While governments are set on steering society toward the electric transition, legacy automakers are recalibrating the timing as they adjust to the waning demand. Several big players, including Ford (F) and General Motors (GM), have recently scaled back their EV plans, while others are relying on hybrid vehicles to start the shift.

As a pure EV automaker, Tesla doesn’t have that option. It led on the way up, and it stands to lead on the way down.

Just as competitors are leaning into cheaper hybrids and better-selling gas models, Tesla appears to be pivoting away from its long-anticipated entry-level EV and entrenching its position as a luxury automaker.

At the same time, resources for the affordable Model 2 EV project have now been allocated to a farfetched robotaxi plan.

The market hasn’t reacted kindly since the debut of a low-cost vehicle was meant to define Tesla’s next era. Shares took another tumble on Thursday when Deutsche Bank downgraded the stock from Buy to Hold on the risks of delaying or killing a mass-market vehicle in favor of an unproven robotaxi business.

Many observers saw an entry-level vehicle from Tesla as a ticket to earnings growth and a solution to flagging sales. Hardening competition, an aging lineup, and weakened EV demand have dragged the stock down almost 40% this year.

Against an increasingly pessimistic backdrop, the Model 2 was meant to be a shimmering answer to Tesla’s short-term woes. But without a daring entry-level vehicle to reinvigorate Tesla’s financials, the company’s challenges seem less temporary. For some analysts and investors, Tesla doesn’t have a future without the Model 2.

The apparent refocus from the Model 2 to an autonomous fleet echoes the indecision that cursed Apple’s recently scuttled car project, which wavered between a Tesla-inspired EV play and self-driving technology.

Musk seemed to take pleasure in Apple’s retreat, but he may be repeating Cupertino’s mistake: chasing autonomous ambitions instead of sticking to core competencies.

There’s also Tesla’s safety record.

Earlier this month, the company settled a wrongful death lawsuit brought by the family of a Silicon Valley engineer who died after his Model X, with its Autopilot feature engaged, crashed into a barrier on a busy highway. The case raised questions about consumer perceptions and their reliance on autonomous technology. Last year, the US Justice Department launched an inquiry into how Tesla and Musk promote its driver assist systems.

The idea of driving without human intervention has played a crucial part in Tesla’s tech-juiced growth story. But what if it’s the only part?

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