Tesla, first slowdown in revenues since 2012 and profits down 55%. “We will squeeze every penny out of your car costs”

Tesla is no longer racing: between January and March the carmaker’s revenues fell by 9% to 21.3 billion dollars, recording the first quarterly decline since 2012. Profit more than halved, with a drop of 55% just over 1.1 billion. Is it a momentary slowdown or a sudden stop? The market has been asking this for months and, for the moment, it seems to lean towards the second answer: since the beginning of the year, the manufacturer founded by Elon Musk has lost 40% on Wall Street, slipping to 450 billion in market capitalisation.

The slowdown in sales of electric cars

Of course, there is no shortage of justifications for the decline in the first quarter. Tesla had to stop production at its Berlin gigafactory due to arson and has increased investments in artificial intelligence and the development of new low-cost electric models. However, investors were particularly affected by the decline in deliveries and continued price cuts implemented in Europe and the United States. Two clues that highlight equally looming threats for Tesla. On the one hand, the lower growth in registrations of electric cars, which, with the exception of China, remain just above 4% of global car sales. On the other hand, the fierce Chinese competition which is taking away market shares from Tesla in the domestic market and, increasingly, also abroad.

The cost cutting plan and mass layoffs

To address these challenges, Musk intends to follow a less innovative path: putting the pedal to the metal on savings. It is no coincidence that one of the slides presenting the accounts is entitled “squeezing every penny from the cost of the vehicle” and shows an assembly line with many components and only four people. Recently, moreover, Tesla announced the largest layoff plan in its history, which will affect 10% of the global workforce, i.e. over 14 thousand employees. A few days later, the company proposed to the shareholders’ meeting to reinstate the maxi-salary package of 56 billion dollars for CEO Musk, canceled by the Delaware court in January because it was excessive and contrary to the interests of the shareholders.