Is Germany trembling over Tesla’s cuts?
What is being said in Germany about Tesla's situation after the news of the cuts, some of which (3 thousand out of 14 thousand) could affect the German gigafactory in Grünheide, just outside Berlin.
Faced with the news of the downsizing of the workforce also in Tesla's German Gigafactory, around Brandenburg we wonder what managerial mysteries can hold together Elon Musk's tough battle against environmentalists for the expansion of the factory and the doubling of production and the cut of 3 thousand of the 14 thousand workers announced by the same company worldwide.
THE IMPACT OF THE TESLA CUTS ON GERMANY
Because this is the extent of the reduction in the workforce at the Grünheide plant, the small town on the outskirts of Berlin: 3,000 cuts on a workforce of 12,500 workers, as highlighted by the Handelsblatt , extracting from the company email revealed by the international media the chapter regarding the German Gigafactory.
Investors must have asked themselves the same question if – as reported this morning by the same German economic newspaper – Tesla shares have lost share on the stock market. “Normally, a hard and fast rule applies to the US stock market: if companies announce large-scale job cuts, stocks rise, as happened, for example, with the past austerity programs of Meta and Microsoft,” he writes the Handelsblatt, “because ultimately, such announcements fuel investors' hopes for leaner, lower-cost companies. Things were different for Tesla on Monday.”
The cut announced by the American car manufacturer, justified by too rapid and disorderly growth in the workforce in recent times, and aimed at making the company "lean, innovative and hungry for the next growth cycle" did not convince investors, who on the stock market they have demonstrated all their impatience. This is what the Handelsblatt writes, underlining how on the Monday of the announcement, Tesla shares fell by 5.6%, to fall by another 0.8% after trading: “consequently, around $42 billion in market capitalization they vanished into thin air."
COMMENTS FROM THE GERMAN PRESS
For the German press, however, the reasons that force the downsizing are not contingent, as Musk's statement would like to imply. The imaginative American entrepreneur needs more than fantastic visions. “It seems that the Musk principle is reaching its limits,” comments the Handelsblatt , “for years the Tesla boss has consoled markets in difficult times with fantastic visions. A week before the presentation of new quarterly data, he needs a better idea. Investors expect answers."
The newspaper then adopts the Bloomberg agency's comment, "Elon Musk's Tesla bait is getting old", and takes up a series of drastic opinions such as those of Wedbush analyst Dan Ives, long one of the biggest fans of the company, who spoke of "another dark day for Tesla" or the co-head of the Gerber-Kawasaki investment house, Ross Gerber, who wrote on platform X about a "massacre" for which Musk alone is responsible.
NOT JUST TESLA: ELECTRIC CARS ARE IN DIFFICULTY
The German newspapers report all the less than exciting data on Tesla's sales ( the numbers are well summarized here ), widening the discussion to the difficulties of the electric car sector which is encountering great resistance in the appreciation of motorists. Even in Germany. A few weeks ago the first German public television network Ard dedicated a long report to the topic focused on electric cars, visiting various dealerships and noting how intelligent promotions, substantial discounts and a prominent place in the showroom had no impact on customers. “The proposed electric models are too expensive, not innovative enough, and customers simply have many unanswered questions,” was the complaint of Stuttgart branch manager Frank Hettler. Customers' doubts are very pragmatic, added the dealer, and the questions they ask are basic: “Is the charging infrastructure the right one, do the vehicles keep what they promise even at sub-zero temperatures? What do I do with the car when it's old? Can I get rid of it if I want to resell it?”. A situation that slows down the transition towards electromobility, aggravated by a sort of rebirth of combustion engines, whose sales have instead increased again. And which weighs on the accounts of the manufacturers, including Tesla.
Added to this is the new Chinese competition, although even Tesla's fiercest competitor, BYD, is having to record sales declines.
“But Tesla seems to have slowly reached the end of the steep growth curve,” observes expert analyst Don Dahlmann in the industry magazine Gründerszene, “and the politics of one car (almost 90% of sales concern Tesla 3/ Y) could cause problems in the future. Last year's stock market gains have all disappeared as investors are slowly becoming skeptical.
THE MUSK PRINCIPLE
But even for Dahlmann, Tesla's problem today (and tomorrow) could be what until yesterday was its fortune: the Musk principle. “Elon Musk is one of those people who thinks less about what is allowed today and more about what will be required in the future,” argues the expert, “Musk's investments in Paypal in the 1990s and his other investments in SpaceX and Tesla have proven that it can do things successfully because it can predict future trends better than the competition. There is no doubt that robotaxis are coming. However, it is debatable whether Musk is five or ten years ahead. So Tesla is still betting on the future, but the danger is that Musk neglects the present too much. Even if the demand for electric cars increases worldwide and there is enough space in the market, the Tesla 3 alone will not be able to secure the company. It would therefore not be surprising if, in the coming years, Tesla slipped into a phase of stagnation.”
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/licenziamenti-tesla-impatto-germania/ on Tue, 16 Apr 2024 10:33:45 +0000.