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Tesla’s decision to cut jobs has intensified concerns among Wall Street analysts, who speculate that the electric vehicle (EV) maker may be facing a problem with demand. The job cuts, which reportedly amount to around 7% of Tesla’s full-time workforce, are intended to reduce costs and improve profits. However, the move suggests to some investors that the company may be struggling to maintain sufficient demand for its vehicles, particularly the Model 3.
In 2018, Tesla ramped up production and deliveries of the Model 3 aiming at mass-market appeal, but the job cuts could potentially signal that the demand for these vehicles might not be as high as expected. Additionally, Tesla recently discontinued the cheapest versions of its Model S and Model X vehicles, which adds to the concern.
To address this situation, Tesla may need to dig into new markets, or introduce new, more affordable models to boost demand. The company will also need to demonstrate that it can maintain steady and sustainable profitability, beyond the occasional profitable quarters it has posted in the past.
So far, the company’s CEO, Elon Musk, maintains that there is still substantial demand for Tesla’s vehicles, especially in international markets, and a focus on producing lower-cost versions will allow it to reach more consumers. However, time will tell whether these strategies will succeed in addressing the market’s concerns.
