When Tesla’s (TSLA) CEO Elon Musk sent an email to senior staff demanding that workers return to work, it suggested a layoff would follow. In the email, the CEO said that staff unwilling to return to the office should quit.
Tesla benefits by cutting staff and avoiding severance payments.
When the CEO said that he expects headwinds will require a 10% staff cut, it sent TSLA stock sharply lower. EV investors cannot ignore the warning. Growth companies do not need to cut staff. The expense cut suggests strong competitive pressures ahead, higher variable costs from the supply shortage, and required adjustments from Shanghai’s two-month lockdown.
Loyal Tesla investors need to assess the potential competitive threats ahead. In China, the government may help Nio (NIO) by offering tax credits. This will pressure Tesla to lower prices further.
In the U.S., Rivian (RIVN) could dominate the EV truck market, followed by Ford (F) with its F-150 EV. Lucid Motors (LCID) will compete for Tesla’s high-end car market share. Fisker (FSR) is late in entering the EV space and is not a threat to Tesla at this time.
Tesla stock may weaken as the CEO secures funds for buying Twitter (TWTR). Musk may negotiate a lower price for TWTR stock, which benefits Tesla stock. The lower the collateral using TSLA stock, the better off shareholders become.
