The analysts at RBC have pointed out that Tesla has been promising high levels of growth and innovation but the company has delivered only a fraction of the promised units and is barely making profits. They believe the company faces the challenge of delivering high volume at high ASPs/margins and has to do something about it soon.
Last Friday, Tesla said it was planning to lay off over 3,000 employees in order to cut costs. CEO Elon Musk said the company was looking to offer its Model 3 sedan at more affordable prices for its customers. Tesla has not yet been able to provide the Model 3 at its promised price of $35,000.
Tesla’s stock plummets on news of job cuts and lower Q4 profits
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Musk also hinted that the company’s fourth-quarter profit would be slightly lower than third quarter levels. Tesla is set to report fourth-quarter results on January 30. The announcement raised concerns about the company’s ability to sustain itself.
Tesla has also reduced its production hours for its Model X crossovers and Model S sedans, according to a report by Bloomberg. These changes come after the company decided to stop selling the cheaper versions of these models and are part of the company’s efforts to improve efficiencies in its production lines.