Tesla is approaching its next quarterly earnings this week under unprecedentedly difficult conditions.. Rumors about a change in strategic priorities, a recall of defective Cybertruck pickups, large-scale staff cuts and a stock price that has fallen by 40% since the beginning of the year will make even his most devoted fans question the adequacy of the measures taken by Elon Musk.
Image source: Tesla
As reported the day before, for the sake of the need to put things in order at Tesla, its CEO Elon Musk even canceled a long-prepared trip to India, during which the fate of the local car assembly plant could have been decided, rumors about intentions to build which have long been circulating in the media. Mass layoffs of employees, which in Elon Musk’s official letter were estimated at a moderate 10% of the staff, are quite painful in practice, and may not be limited to the specified share, as Bloomberg explains.
Sources familiar with Tesla management's plans claim that Musk is ready to cut up to 20% of the company's employees, and he allegedly calculated this proportion by looking at the magnitude of the decline in electric vehicle sales in the first quarter compared to the previous one.. Given the recently promised announcement of a robotic taxi, which will take place on August 8, one would think that Musk wants to free up resources to work on this project, but last weekend showed that Tesla personnel are losing jobs mainly evenly across structural divisions. At the same time, some employees were simply not notified in advance, and were faced with canceled passes already at the entrance of offices and enterprises, where they usually went after the weekend. Security even had to sort Tesla employees into current and former ones, taking them to the corporate parking lot to scan their badges.
The company is expected to tell investors this week that it faced a 40% decline in operating profit and posted a first-quarter revenue decline for the first time in four years.. Chaotically applied price reductions for most of the range of products offered by Tesla only deepened the impression that such measures were hasty. Let us remind you that over the weekend the company managed to reduce prices for its electric vehicles by an average of $2,000 in the USA, China, Europe, Africa and the Middle East.. In addition, in the US, the cost of the FSD option was reduced for the second time in the last eight months – this time, from $12,000 to $8,000. There is also a contradiction in this step by Musk, because he previously argued that FSD should become more expensive because it is constantly improving its capabilities.
According to informed sources, the project to produce an electric car worth $25,000 has not been abandoned by Tesla, it’s just that Elon Musk is bringing the initiative to produce a robotic taxi to the fore.. By the way, it was initially believed that it would use the very modern platform that was created with a $25,000 model in mind.. However, there were some pleasant side effects.. It is alleged that now efforts to reduce the cost of a robotic taxi will allow some of the innovations to be implemented during the planned update of the already produced Model 3 and Model Y. It is not specified when Tesla will decide to bring a $25,000 electric car to market, but a robotic taxi will have to precede it.
Analysts warn that Tesla risks an outflow of funds from investors who were betting on the company's ability to produce many electric vehicles at minimal cost.. The robotic taxi is more of a technological challenge that will motivate Elon Musk to overcome difficulties and try to prove that Tesla is the industry leader in terms of innovation, but it will have a very indirect relationship to the economic efficiency of the business.
The initiative to create a self-driving taxi comes at a difficult time for the industry in Tesla's plans.. Uber showed great ambitions in the same area in 2016, but in 2018, a fatal collision of a prototype with a pedestrian in Arizona undermined the morale of the specialized division, and the business was sold.
Last October, General Motors' subsidiary Cruise encountered an unpleasant incident: a self-driving prototype ran over a woman who was thrown from under the wheels of another car.. The automation was unable to recognize either the type of collision, or the victim’s legs sticking out from under the bottom, or determine the position of the car on the roadway.. As a result, with the victim already pinned under the bottom, the car attempted to drive another six meters in order to press against the curb and clear the roadway for other road users.. It is impossible to guess how loyally US regulators will be able to evaluate the admission of Tesla robotic taxis to public roads under such conditions.
However, Elon Musk is clearly making a serious bet on the FSD complex, since the purchase price of this option or subscription with monthly payment was recently reduced, and all customers in the United States must undergo a test drive with active automation functions, and those who wish can activate FSD on first month free. At the same time, many analysts continue to say that an affordable electric car would be more important for Tesla’s business than a robotic taxi.. It seems that Elon Musk has his own opinion on this matter, but this contradiction could have disastrous consequences for the company’s business.