---
title: "Layoffs by 10%, low-cost car \"aborted\", Tesla with a market value below 500 billion \"stuck\""
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/202110170.md"
description: "Tesla's market value fell below $500 billion on Tuesday, dropping by about 4% and leading the new energy vehicle sector. The company announced a global workforce reduction of 10%, and executive departures further dampened investor sentiment towards the company. Tesla's stock price is the second largest decliner in the S&P 500 index in 2024, with a decline of about 38% this year. Tesla's market value has evaporated by over $290 billion, as it plans to abandon producing low-cost cars in favor of robotaxis. A 10% workforce reduction means 14,000 people will lose their jobs. Tesla CEO Elon Musk stated that the layoffs are aimed at cutting costs and improving productivity"
datetime: "2024-04-17T00:04:04.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/202110170.md)
  - [en](https://longbridge.com/en/news/202110170.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/202110170.md)
---

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# Layoffs by 10%, low-cost car "aborted", Tesla with a market value below 500 billion "stuck"

According to the Zhitong Finance and Economics APP, Tesla (TSLA.US) announced a global workforce reduction of 10% on Monday. Drew Baglino, Senior Vice President of Core Executives, Powertrains, and Energy Engineering, who has been with the company for 18 years, announced his departure, further weakening investor sentiment towards the company. The stock fell by about 4% on Tuesday, with a market value dropping below $500 billion, leading the new energy vehicle sector in decline.

As of the Tuesday closing, Tesla fell by 2.71%, with a decline of about 38% this year. **Tesla's stock price is the second largest decline in the S&P 500 Index in 2024, with a market value evaporating by over $290 billion since the end of last year. The company's market value has not fallen below $500 billion since the end of April last year.**

It is understood that the company's troubles began in October last year when it warned of a slowdown in demand for electric vehicles. However, it wasn't until this month when Tesla reported first-quarter sales well below analysts' expectations that the extent of this weakness became apparent. These numbers reignited concerns among investors about Tesla's growth trajectory, with reports following that the company plans to abandon the production of cheaper electric cars and instead focus on manufacturing so-called robotaxis.

Elon Musk stated that the company will launch robotaxis in August, at a time when Tesla's profit prospects are rapidly dimming due to the company repeatedly lowering car prices to attract buyers.

As of this Monday, **due to the slowdown in demand for electric vehicles, Tesla announced a global workforce reduction of over 10%. Data shows that as of the end of 2023, Tesla had a total of 140,473 employees globally, and based on this number, a 10% reduction means that 14,000 people will lose their jobs.**

In an email sent to employees by Tesla CEO Musk, the reason for the layoffs was stated as "redundancy in certain roles and functions." Musk stated in the email: "As we prepare for the next phase of company growth, it is extremely important to consider cost reductions and productivity improvements in all aspects of the company. As part of this effort, we have thoroughly reviewed the organization and made the decision to reduce the global workforce by over 10%. Nothing pains me more than this, but it must be done."

## Analyst's View

Morgan Stanley analyst Ryan Brinkman stated: "The large-scale layoffs announced on Monday equate to a reduction in personnel capacity, so it should now unequivocally indicate that the decline in delivery volume is a result of declining demand, not supply."**While global electric car manufacturers are plagued by insufficient demand, for Tesla, this is a more frightening situation than for other car manufacturers. This is because the company led by Elon Musk has a huge valuation premium, partly due to its potential to dominate the future electric car industry.** Even Musk himself has stated that unless the issue of autonomous driving cars is resolved, the company will be "virtually worthless."

However, analysts and investors believe that while manufacturing fully autonomous driving cars is crucial for the company's prospects, manufacturing affordable electric cars is also important for driving growth, especially since most experts believe that autonomous driving cars may take decades to achieve growth.

In contrast, Wedbush analyst Dan Ives believes: "**Given the dismal first-quarter delivery numbers and overall business pressure, Tesla's proactive cost-cutting measures are significant for a company caught between two growth waves**."

Ives stated: "We need to hear Musk's reasons for cost-cutting, future strategies, product roadmap, and overall vision, otherwise many investors may turn more pessimistic."

David Wagner, portfolio manager at Aptus Capital Advisors, said: "The recent bullish view on Tesla is that investors are waiting for the company to launch a low-cost platform that will greatly boost growth." "But the market is realizing that this may be unlikely, as a $25,000 car is already available today—manufactured by China's BYD."

It is reported that in the last three months of 2023, Chinese electric car manufacturer BYD surpassed Tesla to become the world's largest electric car seller. Although the company does not sell its cars in the United States, it offers several affordable electric cars in its product lineup

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