Major layoffs and postponement of Model 2, Musk’s “All In” RoboTaxi and FSD – Wall Street Insights

Delayed Model 2, stock price plunged 40%, global layoffs…Tesla returned to chaotic “wartime mode”. What triggered all this was a strategic change led by Musk: shifting the focus from launching new models to all-out advancement Autopilot.

At the beginning of this year, the hottest topic surrounding Tesla was the Model 2, an entry-level model that has been brewing for four years and is positioned lower than the Model 3. This car was originally expected to be put into production in mid-2025, helping Tesla to grow globally. Break out of the fierce price war and open up a new growth curve.

But the plan could not keep up with the changes. Media reports earlier this month stated that Tesla gave up the development plan of the cheap model 2 and turned its focus to the development of Robotaxi. Subsequently, Musk announced that Robotaxi would be officially released on August 8, which actually confirmed the content of this report.

The latest media reports also reveal that Tesla is “doing all it can for autonomous driving” and that robotaxis are now taking priority over new models, both in terms of setting schedules and arranging production capacity.

This change was very sudden and unexpected to investors, analysts and even Tesla insiders, and Tesla’s stock price also accelerated its decline after the news. On Tuesday, Tesla will announce its first-quarter financial results, and current market expectations are not optimistic.

Walter Isaacson mentioned in “The Biography of Musk” that Musk sometimes enters a “destructive demon mode”, which can cause a lot of chaos, but also allows Musk to achieve his goals more efficiently. Purpose.

At the moment, Musk, who is in “demon mode”, may not care about the short-term chaos and is focused on “All In” RoboTaxi and FSD.

‘Wartime CEO’ puts all his money on FSD

Last week, after sending a company-wide email announcing that Tesla would be laying off more than 10% of its workforce globally, Musk liked a post onThe content of the post stated that Musk re-entered wartime CEO mode and decided to bet the entire company on Robotaxi.

Musk also changed his avatar on X to the Devil Champion costume he wore for Halloween in 2022.

A 10% layoff means Tesla will reduce 14,000 jobs globally, but the media quoted people familiar with the matter as saying that the actual number of layoffs may exceed 20,000. Musk’s reason is that Tesla should reduce the number of employees by 20%. Because Tesla’s vehicle deliveries fell 20% from the fourth quarter to the first quarter.

The employees who escaped layoffs and stayed at Tesla felt more uneasy than lucky at this time. According to the above-mentioned media, Tesla employees believe that Musk has fundamentally changed the “marching orders”.He declared last week that the company was “doing everything we can to work on autonomous driving.”

The media quoted a person familiar with the matter as saying that both in terms of setting timetables and arranging production capacity,Robotaxis are now taking precedence over a cheaper car that Musk first proposed four years ago.

Musk has been obsessed with autonomous driving for a long time. He once called himself “the boy who cried for FSD.”

Musk has long regarded autonomous driving and Robotaxi as Tesla’s most important products, believing that their potential value could be as high as trillions of dollars. For more than a decade, he has been talking about the promise of autonomous driving and convincing customers to pay thousands of dollars for FSD products.

Investors are losing patience

Tesla’s sudden change in strategy is likely because Musk and engineers saw the breakthrough progress of FSD.

According to media reports, Tesla began rolling out the fully autonomous driving (FSD) V12 version to employees in November last year. FSD V12 is considered a major leap forward for Tesla in autonomous driving technology. It is the first time Tesla has begun using neural networks for vehicle control, including controlling steering, acceleration and braking.

Ashok Elluswamy, director of Tesla’s self-driving program, wrote on X last month that this should lead to “unprecedented progress.”

However, Musk and engineers’ optimism about FSD cannot offset concerns about regulatory uncertainty.

In the United States, self-driving cars are currently only allowed to undergo limited testing in specific areas, and regulatory attitudes vary from state to state. There are still many legal and regulatory obstacles to promoting FSD across the United States and even the world, which will greatly reduce its salable market and affect production and profitability.

Still, Musk believes Tesla can make robotaxis a reality by making FSD available to more consumers and lowering the price.He’s pushing for test drives and 30-day free trials to promote the feature, increase revenue, and collect more data.

But investors’ patience with Tesla is running out.

Bloomberg analyst Steve Man said investors, especially institutional investors, are losing patience and that the initial hype about fully autonomous driving and robotaxis has waned and “the pendulum has swung in the opposite direction.”

Deutsche Bank analyst Emmanuel Rosner said last week that “Tesla’s stock will need to go through a potentially painful shift in ownership base, and investors who have previously focused on Tesla’s electric vehicle sales and cost advantages may throw in the towel.” .” He downgraded Tesla’s stock from buy and cut his price target by more than a third.

On Tuesday, Tesla will announce its first-quarter results. The market expects its operating profit to plummet by 40% and its revenue to decline for the first time in four years.

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