Tesla’s recent financial reports have been anything but promising, casting shadows of concern across its electric empire. After a particularly challenging last quarter, it appears the company is taking radical steps to revive its economic vitality. In a move that shocked many, Tesla has slashed the price of its Full Self Driving (FSD) subscription by half, bringing it down to $99 per month in the United States. This price cut from the previous $199 is more than just a discount—it’s a reflection of the urgency to inject some liquidity into Tesla’s accounts.
Sales Slump Leads to Layoffs
The price cut coincides with a worrying downturn in Tesla’s recent performance metrics. For the first time since 2020, Tesla reported a loss in its first-quarter earnings of 2024, with vehicle deliveries down by 8% year-over-year and a steep 20% decline compared to the last quarter of 2023. Despite financial analysts’ expectations of 450,000 units, Tesla only managed to push 387,000 sales. The Cybertruck, which has been delayed and is not included in these figures, is unlikely to bridge this significant shortfall.
Amidst these financial turbulences, Tesla is reportedly making an even more drastic move—layoffs. According to The Verge, about 10% of Tesla’s workforce, which translates to over 14,000 employees, have been notified of impending job cuts. An internal memo from CEO Elon Musk, released this Monday, describes these layoffs as regrettable but necessary for the company‘s survival and future growth.
The Promise of Model 2: Too Good to Be True?
In the midst of financial cutbacks and workforce reductions, Tesla seems to be banking on future innovations to revitalize its sales. Particularly, there’s buzz around a potential new model—dubbed “Model 2” by analysts. Elon Musk has hinted at this new project, envisioned for a 2025 launch, which aims to break into the low-cost electric vehicle market with a price tag under $25,000. If realized, this would significantly undercut today’s cheapest electric car in France, the Dacia Spring, which sells for approximately €18,400 without extras.
However, despite Musk’s optimistic projections, some analysts are skeptical about the feasibility of launching Model 2 by next year, citing the project’s high development costs as a potential barrier.
Moving Forward Amidst Challenges
While Tesla prepares to navigate through these layoffs and a possible new phase of growth, the impact on its employees and their morale remains a significant concern. As the company aims to stabilize its finances and potentially bring innovative products to the market, the broader implications of its current strategies on its reputation and stakeholder trust are yet to be seen.
In summary, Tesla is at a critical juncture where its ability to balance cost-cutting measures with innovative strategies could determine its trajectory in the competitive electric vehicle market. The road ahead is fraught with challenges, but also potential for significant evolution.
