Tesla is encountering significant challenges as it seeks to bolster its car business in 2023. The electric vehicle (EV) manufacturer, led by the high-profile and often polarizing CEO Elon Musk, is seeing its stock prices tumble as the company grapples with mounting pressures from various fronts. A recent delivery report revealed a stark decline in car sales, indicating deeper issues within the company.

On Wednesday, Tesla announced that its vehicle deliveries for the first quarter of the year plummeted by 13% compared to the same period last year, totaling just 336,700 units. This figure fell short of analysts' expectations, prompting Dan Ives, a well-known analyst who usually maintains a bullish outlook on Tesla, to label the results as a "disaster" and characterize the company as being in a "full-blown crisis." As the auto industry evolves rapidly, the stakes have never been higher for Tesla to adapt and innovate.

Business Insider reached out to several experts within the automotive sector to discuss potential strategies for Tesla's revival. A common theme emerged: the necessity for Tesla to diversify its product lineup. Sean Tucker, the lead editor of Kelley Blue Book, pointed out that while the public's focus has been on Musk's political controversies, the stagnation of Tesla's product offerings might be contributing to the declining sales figures. Tucker noted that since peaking at 60,325 monthly sales in February 2023, Tesla's deliveries have shown a continual downward trend.

The company launched an updated version of its popular Model Y earlier this year; however, it has not introduced a new vehicle model since the much-anticipated Cybertruck made its debut in 2023. Despite being the best-selling vehicle in the growing small EV truck category for 2024, the Cybertruck's release has not resulted in a significant increase in Tesla's overall sales numbers. In fact, during the first quarter of this year, Tesla sold only 12,881 vehicles classified under "other models," which includes the Cybertruck as well as the Model S and Model X.

Michael Lenox, an esteemed business professor and EV industry authority at the University of Virginia's Darden School of Business, emphasized that the competitive landscape is evolving. He pointed out that both European and Chinese manufacturers have stepped up their game, introducing a range of EV models that are gradually eroding Tesla's former market lead. "We've seen significant entries from established global automakers," he remarked.

In addition to this, Stephanie Valdez Streaty, director of industry insights at Cox Automotive, highlighted the dramatic increase in the number of EV models available in the U.S. market, which has surged from about 19 models in 2020 to an astonishing 78 currently. This saturation underscores the urgency for Tesla to launch an affordable EV, a model the company has announced is set to begin production in the first half of 2025. Valdez Streaty stressed that affordability remains a critical issue for consumers, particularly as the average price of new vehicles in the U.S. approaches $50,000, compounded by impending tariffs that could inflate prices even further.

"Tesla needs to introduce a new model that is financially accessible to consumers," she asserted, suggesting that the current economic climate makes this an opportune moment for the automaker to unveil a mass-market EV. Valdez Streaty mentioned that Tesla had previously indicated it is navigating between two waves of growth, signaling that it requires a new vehicle to propel it into the next phase of expansion.

While some industry observers speculate that a vehicle priced under $30,000 could be Tesla's lifeline, Tucker offered a word of caution. He noted that the company has not definitively stated that its affordable EV will be a high-volume seller, suggesting it may end up being a modified version of the Model 3 or Model Y featuring a smaller battery or different battery technology. "That's not exactly a high-volume product likely to drive massive sales in the U.S.," he remarked.

In addition to new models, Lenox argued that Tesla must push for advancements in technology, particularly in battery efficiency and cost reduction. He pointed to BYD, Tesla's formidable Chinese competitor, which not only has more models available in the market but also leads in the battery value chain. Recently, BYD reported an impressive 416,000 deliveries in the first quarter, far surpassing Tesla's numbers. Lenox noted BYD's recent innovations, including new fast chargers capable of delivering nearly 250 miles of range in just five minutes, which significantly outpace Tesla's current technology.

Tucker echoed these sentiments, indicating that Tesla lacks enticing innovations in its current pipeline. He explained that Tesla vehicles operate on a 400-volt system, while many competitors have transitioned to an 800-volt system that offers faster charging capabilities and better overall performance. Although Tesla is slated to introduce its robotaxi service in Austin this summer, Tucker cautioned that other companies have already launched their own robotaxi services, often with disappointing financial outcomes.

Tesla has traditionally shied away from extensive advertising, favoring Musk's engaging social media presence and word-of-mouth recommendations. However, this approach may no longer be viable in an increasingly competitive marketplace. As Valdez Streaty pointed out, the rise in competition necessitates a more aggressive marketing strategy to bolster Tesla's brand amidst growing public scrutiny and potential backlash due to Musk's political involvement.

Former President Donald Trump recently showcased a fleet of Tesla vehicles at a White House event, and Commerce Secretary Howard Lutnick encouraged investors to consider buying Tesla shares while prices are low. However, as protests and vandalism against the company continue, analysts warn that the ongoing anti-Tesla sentiment could impact sales. "Not many consumers are likely to cross a picket line to purchase a vehicle," Tucker concluded.