Tesla has significantly reduced the price of its “Full Self Driving” system from $12,000 to $8,000. However, it is important to note that despite the name, this system does not actually allow the vehicle to drive itself, and drivers must remain alert and be ready to intervene. The promise of a fleet of robotaxis by 2020, made by Tesla CEO Elon Musk in 2019, has yet to materialize, and the system still requires human supervision. The price cut, along with reductions in the prices of three of Tesla’s five models, reflects the challenges facing the electric vehicle maker.
The recent price reductions by Tesla include cuts to the prices of the Model Y, Model X, and Model S, with the Model Y being the most popular and top-selling electric vehicle in the United States. The prices for the Model 3 sedan and the Cybertruck remained unchanged. These price cuts come amidst a decline in Tesla’s stock price, which fell below $150 per share, resulting in a 40% drop in stock price so far this year. Increased competition and falling sales have prompted Tesla to offer discounted sticker prices in an attempt to attract more car buyers.
In addition to the price reductions, Tesla has also made cuts to its marketing team, reducing the number of employees in a newly formed marketing team as part of announced company-wide layoffs. The company’s “growth content” team in the U.S., which consisted of about 40 employees, was eliminated as part of the ongoing job cuts. This move signals a pullback from Tesla’s nascent advertising initiative, which CEO Elon Musk had approved less than a year ago. The cuts also affected employees in Tesla’s design studio in Hawthorne, Calif.
Investors have been urging Musk to focus more on marketing as global electric vehicle sales growth has slowed and more competitors have entered the market. Tesla’s embrace of advertising coincided with Musk’s acquisition of Twitter, which he has renamed X. The social media platform has seen a decline in ad revenue under Musk’s ownership, driven by concerns over content moderation and Musk’s controversial posts. The job cuts at Tesla’s growth team may push the total number of layoffs beyond 20,000, as Musk had previously announced that more than 10% of the global workforce would be affected.
Overall, Tesla’s price reductions on its “Full Self Driving” system and several of its vehicle models, as well as cuts to its marketing team, reflect the challenges facing the company as it deals with falling sales, increased competition, and a decline in stock price. Despite promises of a fleet of robotaxis and efforts to implement marketing initiatives, Tesla continues to face obstacles in achieving its goals. The impact of these changes on the company’s overall performance and future directions remains to be seen.
