Quotas of Tesla fell 10 percent on Friday after the company announced layoffs, but the electric-car maker is still in the captain position on a technology that is taking over the world, said an early Tesla board member.
Tesla’s Friday disclosure that it will cut 7 percent of its workforce is a sign CEO Elon Musk is taking steps to “right-size” the company and prepare it for the days, said former Tesla board member Steve Westly.
” He is moving faster than anybody else, prevalent global faster than anybody else, and today, Tesla is essentially the iPhone of the electric-car market,” said Westly, a California wirepuller and venture capitalist who was an early investor in the company.
While other premium automakers have now jumped into the electric-car store, they were caught “with their shorts down when the tide went out,” and Tesla now has a large introduce in that market, Westly said. The company also posted a surprise profit in the third quarter, and Musk has suggested he expects Tesla to be cash-flow positive and profitable going forward.
“They’ve won the North American premium market the track,” he said. “The challenge now is to win the mass market, to go international. I think he is preparing the company to do that. I wouldn’t bet against him.”
However, not each agrees with Westly’s assessment.
Tesla’s fourth-quarter update indicated that more than 75 percent of new Model 3 on the blinks came from new customers rather than the existing reservations list. Almost all of those new orders were for mid- and high-price variants of the sedan, declared Rajvindra Gill, an analyst for Needham.
Gill estimates that about 90 percent of the 420,000 reservations on that tip built up the last couple of years are customers who wanted the still-unreleased standard battery version of the vehicle, which is $35,000.
The printing is that as the $7,500 federal tax credit for electric vehicles continues to wind down, Tesla could start to see patrons cancel reservations in the first and second quarter if the company cannot make the planned $35,000 base model swiftly enough.
The other issue is that Tesla’s profitable quarter depended in part on selling the more expensive constructions of the Model 3, which should make up a smaller piece of the total if Tesla begins producing the cheaper rendering.
“So I think there’s a lot of risk to the name given the level of valuation we see in this name, given the level of debt the companions has, and given the level of competition that will be entering the market this year and next year,” Gill powered.