Declining sales, incomprehensible decisions, layoffs: but what is happening at Tesla?

Tesla is coming out of a resplendent 2023, shattering all its sales records in particular thanks to its Model Y electric SUV, which became the best-selling car in the world last year. But the start of 2024 is much more complicated for the electric vehicle manufacturer.

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During the first quarter of 2024, Tesla delivered only 386,810 cars, while analysts expected almost 70,000 more. Tesla’s sales and production were down compared to the first quarter of 2023. “The decline in volumes is due in part to the initial production phases of the new version of the Model 3 at our Fremont factory”Tesla defended himself, also citing the impact of the conflict in the Red Sea.

Autonomous driving at all costs?

Tesla’s stock is down at the start of 2024, among other things because of these disappointing volumes. But Elon Musk’s various decisions have not convinced investors either. Notably, Reuters revealed that the highly anticipated $25,000 Tesla, known as Project Redwood (codenamed NV9), has reportedly been scrapped. Elon Musk denied this information with a simple “Reuters is lying (again)”.

New revelations made by the American media Electrek allow us to see a little more clearly. Sources other than those of Reuters were able to confirm that development of the model had indeed been stopped, in favor of a version dedicated to autonomous driving which will be announced in August.

If Elon Musk therefore seems dissatisfied with the term “abandoned” regarding his project, in fact, no Tesla employee would work on it anymore. Many people who previously worked on this car were also let go, as part of a large layoff plan announced internally, after Elon Musk asked them to document their research as much as possible: “We wouldn’t want all our work to go to waste”.

More than 10% of Tesla’s payroll, which has around 140,000 employees, would have been let go, officially following “hiring inefficiencies due to rapid growth”. Other revelations made by Electrek support the thesis according to which these layoffs are primarily due to a change of direction by the manufacturer, which now wishes to prioritize the development of autonomous driving.

After all these decisions that are misunderstood internally and among investors, Elon Musk therefore has no room for error on the progress of Autopilot. Other manufacturers, such as BYD which has become the largest seller of electric cars in the world in 2023, or even Xiaomi which has just entered the automobile market, can only rejoice in Tesla’s lack of interest in affordable models.

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