Tesla shares hit a new low of below $150 as the automaker struggles with decelerating electric vehicle sales and increased competition. This marks a significant decrease from the company’s performance a year ago, with shares down over 39% for the year. Tesla reported a drop in sales last quarter, delivering around 387,000 vehicles which was below analyst expectations and almost 9% lower than the previous year. This decline in sales comes as electric vehicle sales have also slowed.
To address the challenges facing the company, Tesla announced plans to cut at least 10% of its global workforce in an effort to reduce costs. CEO Elon Musk stated that while he hates having to make these cuts, it is necessary for the company to remain lean, innovative, and ready for future growth. Tesla is expected to report a drop in first-quarter earnings on April 23, and investors will be looking for answers during the company’s conference call. Of particular interest is the status of the Model 2, a more affordable EV that was promised by Tesla but reportedly facing delays.
Analysts are eager to hear from Musk about the company’s strategy, product roadmap, and overall vision moving forward. With weak demand affecting Tesla’s global sales in 2024, there is concern that investors might lose confidence in the company. Electric vehicle sales in the first quarter of the year only rose by 2.7%, a significant decrease from the previous year. This challenging environment has put pressure on Tesla to deliver results and meet investor expectations amid increasing competition in the EV market.
The timing of Tesla’s planned layoffs and other corporate actions, such as revisiting a controversial compensation package for Musk and a potential move of incorporation to Texas, adds to the uncertainty surrounding the company. The voiding of the compensation package by a Delaware judge earlier this year raised questions about Musk’s influence on the company’s decisions. With the annual shareholders meeting approaching in June, Tesla will have to address these issues and provide a clear path forward for investors. The company is facing a critical moment as it navigates market challenges and strives to maintain its position in the electric vehicle industry.
