In the last few days, the share price of the electric car manufacturer Tesla has dropped sharply after it announced layoffs across its workforce and factories as part of a strategy to stabilize and grow its revenue in the face of increasing market challenges.
The period of 2024 witnessed a big rise in Tesla stocks by 43 %, and the main reasons influencing this drop are the lack of sales and an inconsistent supply chain.
In the first quarter of 2024, Tesla reported revenues of $21.3 billion, which is 18% lower than the previous year’s sales. Analysts had predicted annual sales of over $22 billion, but sales were $8 billion less.
Thus, the one thing that stands out is that the firm will accelerate the start of production of new vehicle models in Q3 2025. This, in turn, gives the investors hope, illustrated by an increase of over 12.5%, registered only during after-hours trading sessions.
Although it shows positive development, the car has not been informed about its price. CEO Elon Musk talked about the fact that the company didn’t only want to build cars like other car makers but also expand into AI and start producing self-driving vehicles.
In the meantime, observers are also dubious, pointing at difficult technical, regulatory, and operative barriers that must be overcome.
Tesla, in the face of these problems, has announced mass layoffs coming mid-June, with 3,332, 2,688 in Texas and 285 in New York slated to be laid off in California.
These cuts may harm Tesla’s labour force, but CEO Elon Musk has played down the severity of the situation by expressing the company’s previous milestone of manufacturing jobs in California reaching over 30,000.
Besides the dispute over a Tesla CEO’s salary, Musk is still going on the compensation case. The Friday filing shows shareholders to vote on the amended version of the proposal invalidated by the Delaware judge who ruled for the violation of fiduciary duty by the directors of Tesla in their record $56 billion payout. With an estimated value that is considerably down, but still the existing package remains significant, however, it continues to involve wide debates.
On the one hand, Tesla will have to navigate a number of issues, such as market instability, potential financial and operational threats, and gaining a competitive advantage over other businesses in the industry to achieve success or failure.
