Tesla Lays off Staff. Will it Survive?

Dear Reader,


Tesla announced last Friday it is cutting around 7% of its staff after recently having cut staff again.

https://www.cnbc.com/2019/01/18/tesla-to-cut-its-workforce-by-around-7-percent.html

Also, the subsidies Tesla is receiving are about to be phased out. Will Tesla, the electric car manufacturer, survive? For the next 1-2 years Tesla will survive because the momentum(inertia) of the enterprise is strong. After that, I think there is real danger that Tesla is in danger of ceasing to function as a going concern.

Currently, I think Tesla Inc. is worth around 34% less than its current market capitalization of around 52 bln. USD and stock price of 302.26 USD. In other words, I think Tesla's stock should be trading at 200 USD and this price could be reached in circa 1 year.

Why? Because as Elon Musk states clearly in his letter announcing the layoffs in order Tesla to remain a viable automobile manufacturer it has to be able to produce mass, not expensive cars at scale. He even openly admits what I have stated in posts on Tesla before - that Tesla is a very young car producer and has much to learn. Basically, he tacitly admits Tesla currently lacks the know-how to produce mass cars at scale efficiently - that is with profit. Musk says that in Q4 2018 and Q1 2019 Tesla is about to show a tiny profit with its GAAP results. But as I have read some sites state that Tesla is recognizing advance orders in the current period...

It is worth noting that this is Tesla's second round of job cuts in a year. Truth be told, according to Musk Tesla's full-time employee headcount number grew by 30%. An important fact is that the subsisdies Tesla receives for producing electric cars are about to be phased out. According to Musk the Model 3 price has to fall from 44 000 USD to 35 000 USD and Tesla is supposed to still be a viable(profitable) company. Is it really possible? I will write something I have already written many times - without a technological breakthrough slashing the Tesla model 3 price from 44 000 to 35 000 USD or circa 20% is not possible.

Because of the ferrous metals inputs and other technological impediments the current technology of producing electric cars is simply not profitable.

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Kind regards,

Petar Posledovich