Capital Economy, Business and Finance
Tesla is laying off 10 per cent of its workers, for two main reasons. EV sales growth is slowing for most brands, and Tesla’s is slowing faster than most because Elon Musk has bet big on autonomy over affordability. Musk has always said he wants to put everyone in electric cars but also to make those cars self-driving and lettable by the minute so owners can recoup their costs by hiring their cars out for the 80 per cent of the time, on average, that they’re not using them. To that end he’s prioritised the rollout of a robotaxi later this year over producing a $25,000 car normal people can afford. The latter would have juiced sales. The former simply dismayed investors. Tesla’s share price is down a third this year but its market cap is still 6.2 times sales compared with a ratio of 0.34 for GM and 0.29 for Ford – even though Ford’s EV market share in the US has nearly doubled while Tesla’s has shrunk year on year by nearly a fifth. If it turns out Tesla’s just a car company, not a tech company, it will lose most of its value.