7 Setbacks That Tesla Is Facing – Are They In Danger?

7 Setbacks That Tesla Is Facing

Tesla is a well-known and consistently expanding electric car company. Its continued success has lasted for years now, but not without issues arising. Between CEO Elon Musk’s view in the public eye, exploring new ground with electric cars, legal battles, and a volatile stock market, Tesla has faced its fair share of issues.

Still, the company has stood strong and withstood all manner of problems to currently sit comfortably near the top of auto manufacturers. Keeping up this success has been the result of a variety of factors and people, but it has not made some problems go away. In fact, despite Tesla currently being on a high, many issues have arisen in just the past year that could cause major setbacks for the company. 

Issues Facing Tesla

The issues facing Tesla are numerous and span all manner of sources. From battles with production, to shipping, to government subsidies and everything in between, there seems to rarely be a day where Tesla is not making headlines. Some of the issues facing Tesla have popped up before, only to be dealt with and then rear their head once again; others are entirely new, arising from issues like COVID-19 and recent government regulations. 

For Tesla fans, these issues should not spell fear; there is rarely ever a company that is not dealing with multiple problems at a time, especially when as large as Tesla. Instead, these are things to keep an eye on for the future.

What issues are Tesla facing? Some of the issues facing Tesla are:

  • Government subsidies running out and regulations being added
  • Issues with production quality and time
  • Internal issues leading to unhappy employees
  • Local government tension surrounding factory work during COVID-19 lockdowns
  • Customer satisfaction toeing the line
  • Rising competition from other car manufacturers

Thankfully, Tesla has faced and dealt with almost all of these, in some form, before. Elon Musk, the well-known CEO of both Tesla and SpaceX, has also been very public in addressing some of these concerns. Depending on who is asked, these comments either quell the fears or stoke the flames, but his word certainly has a direct effect on how the company is performing. 

The specifics of each issue Tesla is facing quickly become complicated, so it is best to go into detail before deciding how bad each one is. For now, however, the company is thriving.

The Self-Driving Feature Has Had Some Bad Run-Ins

A large draw the originally put eyes on Tesla’s cars is the autopilot feature. While not fully self-driving (mostly thanks to local laws forbidding it), Tesla cars have the option to come with autopilot; a self-driving mode where the driver simply needs to keep their hands on the wheel, and the car handles the rest.

The feature is supposed to include options for everything, including driving in traffic, switching lanes, handling stop lights and stop signs, detecting pedestrians – all the parts of driving that traditionally need a human touch. As you can imagine, when the feature was revealed, people were skeptical.

Over the years, Tesla’s autopilot feature has received a significant amount of attention. While most of it has been praise for the leaps in car technology and the wonderful workings of the system, this is a case where any piece of bad press can ruin the whole bunch. With a feature like self-driving cars, people are naturally averse to it. Cars are dangerous, and accidents are already not uncommon; when a robot is thrown into the mix to deal with a host of situations, even if the robot performs better than a human, it faces more scrutiny. 

Unfortunately for Tesla and fans of the future, multiple issues have been reported around Tesla’s self-driving feature. From videos of the car not detecting curves in the road to events where a crash resulted in death thanks to the lack of detection, it is fair to trust your own driving skills over the autopilot feature. 

Tesla has faced enormous scrutiny over these events and occasionally relented. While the software gets frequent updates to deal with more situations, and it does have a better track record than most human drivers, it is still a scary possibility that the system will fail.

This is a setback that is unlikely to go away, and it comes with the territory of exploring new ground. As the first car manufacturer to offer almost full self-driving, Tesla is the guinea pig for regulations, events, and public appearance – and this seems to never be far from going south. 

Elon Musk’s Public Attention Can Occasionally Draw Eyes To His Erratic Behavior

Elon Musk is a famous billionaire, head of two technology advancing companies; he also enjoys joking on Twitter and getting involved in a variety of public events. His opinions, statements, and discussions often cause extreme division which directly affects Tesla’s stock price and, by extension, the company as a whole. 

While most of his tweets and communication are harmless memes or simple updates, Elon Musk has a reputation for getting involved in serious events that can sully his reputation. 

When twelve young boys got trapped in a cave in Thailand, Elon Musk decided to step in and attempt to create a submarine to help. Unfortunately, this assistance was not asked for and ultimately proved useless. Musk later went on to call one of the divers who saved the children a “pedo guy”, and ultimately faced a defamation lawsuit for it

While this situation started back in 2018, Elon Musk still has a habit of making comments that could come back to bite Tesla and himself. It is a possible setback constantly waiting to happen; on the flip side, many of his comments and commitments to seemingly random things have also built a cult of personality around him, lending some stock to Tesla’s future. 

It is hard to predict the outcome of any one of Elon Musk’s Tweets. For those interested in tracking Tesla’s health as a company, he is certainly worthy of a Twitter follow. 

Elon Musk also got in trouble for tweeting about Tesla stock, causing the value to skyrocket overnight thanks to the promise of going public. Even if unplanned, his words have a direct effect on Tesla as a whole thanks to his fame.

Additionally, Tesla stock recently split, causing the value to increase dramatically again as more people buy into the company; While this is a great sign for the times ahead for the company, it is important to remember public perception. Stockholders would do well to closely monitor Musk’s tweets. 

Reports Of Low Quality Assurance Makes Consumers Less Likely To Buy

Tesla Motors has long struggled with quality assurance, and despite some good looks in late 2019, the issues do not seem to have gone away. Tesla’s Model 3, their most popular model and the one that catapulted them near the top of auto manufacturers, introduced with it a host of production issues.

Quality assurance on Tesla Model 3s was, for a long while, abysmal. There were issues with quality abound, with reports coming in covering:

  • Chipped and cracked paint
  • Warped bodies and hoods
  • Disconnected seats
  • Loose seatbelt connectors
  • Cracked windshield glass
  • Punctured or warped seats

And more. Basically, any part of the Model 3 could be damaged upon delivery. These issues likely stemmed from a few different sources; when compared to the previously released luxury Model S and Model X, Tesla was suddenly producing significantly more vehicles. With the increase in speed came a clear downturn in quality.

Additionally, the original Model 3 was reported to have over 100 parts that needed to be assembled on the line; with that many moving parts, it is no wonder that something would go wrong so often.

For a little while, after demand slowed down and Tesla improved Model 3 creation, the issues seemingly went away. In late 2019, Tesla released the Model Y and was praised for the improved quality assurance. However, recent rounds of the Model Y have faced even more backlash than the original Model 3. 

Reports have come in with all sorts of issues once again, almost all of them repeats of the original fiasco nearly four years ago. The issues have gotten so bad that Elon Musk recently released an internal memo about how the number of rectifications needed for the new cars must go down. 

These rectifications cost Tesla money, but it also affects the likelihood of future purchases. No one wants to run the risk of purchasing a car and having it not be a high-quality product. With manufacturing as unpredictable as it is, Tesla may be losing out on customers who would love their cars. 

It is likely that Tesla will solve production issues once again, as they did for the Model 3. However, this clearly lays out that Tesla’s need to scale better will stay an issue in the future if something is not done about it. Unless production changes drastically to ensure higher quality cars are leaving the factory – the first time – this will be a stain that could ultimately ruin Tesla. 

Tesla Workers Have Rallied Against The Company For Better Benefits Multiple Times

Tesla has struggled with internal issues in the past across all levels of the business. Many managers and executives work a tremendous amount of hours for the company, with many putting in over fifty hours a week. While the pay is often enough to make this worth it, those lower in the company have valid complaints, as well.

On the factory floor, Tesla has had to deal with workers rallying against the company to attempt to get better benefits. Late last year, Tesla was charged with unfair labor practices for trying to breakdown unionization attempts.

Reports of the illegal practices included hiring security guards to harass union workers, the banning of wearing union merchandise, and even the firing of one employee (they have since been rehired thanks to the ruling). 

One of the largest complaints that factory workers have about working at Tesla is safety concerns; The company has gained infamy for having a significantly higher number of reported safety violations than any other car manufacturing plant in the United States. Over the years, this is not a fact that has changed.

Safety concerns for workers are a big concern; not only should Tesla be protecting its workers and treating them well, but public perception matters with a company like Tesla, which does no marketing. People are more sympathetic to the average factory worker than they are to the big business, and Tesla could easily be losing out on business as more word about this gets out.

COVID-19 Shut Down Tesla Factories And Caused Controversy When They Opened Up Again

Like many businesses, Tesla has dealt with some harsh decisions surrounding the recent COVID-19 outbreak. Based out of California, Tesla was met fairly early on with mandatory factory shutdowns to help slow the spread.

Unfortunately, car assembly is not the sort of task that can be done socially distanced; people are often grouped together working on specific tasks, and then that gets moved forward to another group. Contact between each other is simply a necessity. With no work around in sight, Tesla closed down factories for a short while.

This shutdown obviously did some damage to the company, causing stocks to go down and new production to be put on hold. At this point, everything was par for the course and other businesses felt the same downsides. On its own, this would be a minor setback.

However, Elon Musk took to Twitter to complain about the mandatory shutdown, and eventually, breaking California law, he reopened production on new Tesla units.  While Tesla was back in business, this caused a massive storm around Tesla, Elon Musk, and the workers, who were forced back to work in unsafe conditions if they wished to continue getting paid. 

Although Tesla got permission to begin slight operations within the next few weeks, the effects of this decision are still unknown. With the virus as prominent as it is and still spreading within the United States, multiple factories have led to outbreaks already. If Tesla is next, it could spell disaster for the brand.

Government Subsidies To Make Tesla’s Cars and Solar Panels Cheaper Have Run Out

For a long while, there was a government subsidy for the purchase of electric cars and solar panels, Tesla’s two most popular products. However, a few years ago, these subsidies expired, reducing the total discount that new customers could receive for their purchase.

While this reduction from roughly $7500 to $3000 did not directly affect the cost of buying a new Tesla model, it did make the cars much more expensive on the consumer end. When the subsidies ran out, Tesla saw a fairly significant drop in demand as fewer people could afford the cars of the future. 

No new subsidies have been introduced yet to make purchasing one cheaper, despite some attempts at the federal level. Many states also have subsidies in place, at least for solar panels, but any of these run the risk of not getting renewed as well. 

If the United States government does not decide to give further grants or subsidies for the purchase of electric vehicles, purchases could decrease even further. While this would not spell the end of Tesla – the Model 3 was the best selling sedan of 2019, after all – it could affect the company in the long term.

Teslas are already more expensive than most other cars, fitting firmly into the luxury pool even for the cheapest model. These subsidies previously brought the car down to an affordable level for more Americans. Now that the number of people who can afford a Tesla is much lower, customers could drop.

Rising Competition In The Electric Car Space Means Tesla Is Not As Dominant As It Was

There was a long while where Tesla was the only good manufacturer of electric cars, especially at the luxury level. This provided Tesla with its very own niche; the cars were fast, fun, and beautiful, making them easy sells for those interested in technology and who had the capital to buy one.

Recently, however, Tesla’s place at the head of the electric car table has been facing some contention. Audi, Porsche, and BMW have all released new luxury electric cars within the last year, and all have been well received. While none dramatically dwarf the Tesla Model S, and in fact the Model S is still likely the best of them, it is a sign that the niche is becoming more populated.

On the other side of the spectrum, more cheap electric cars are being produced as well. The Chevy Volt has been in production for some time, and Volkswagen recently introduced two electric cars for roughly $30,000. 

With competition heating up in the electric car space, Tesla likely has to step their game up. More companies entering the race for the best, cheapest, or most fun electric car is a good thing as they try to outdo each other; however, if Tesla loses its lead, the number one reason to buy a Tesla goes with it.

Tesla Discounts:


The articles here on ThatTeslaChannel.com are created by Greg, a Tesla vehicle and Tesla solar expert with nearly half a decade of hands-on experience. The information on this site is fact-checked and tested in-person to ensure the best possible level of accuracy.

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