Tesla, the electric car company defined by the moonshot mentality of its chief executive, Elon Musk, has started to act with apparent caution.
Out of a desire to show some profits, Tesla said on Tuesday it was laying off around 9 percent of its work force. The announcement came a month after Tesla said it was reducing its forecasts for capital expenditures, a move that would conserve some cash.
Mr. Musk almost certainly has not given up his dream of creating a society-changing, sustainable energy company. Indeed, his compensation plan, announced earlier this year, relies on an ambitious expansion. And many investors still believe in Mr. Musk’s boldness, with Tesla’s stock having soared from its recent lows as investors regain faith.
Still, sizable layoffs and moves to conserve cash typically are not the acts of growth companies that are having just a little trouble achieving their goals.
And there is a danger for Tesla if it starts to behave like a normal company: Investors may start to value it as one, and its high-flying stock may tumble.
For most of Tesla’s history, Mr. Musk has proposed groundbreaking new products and convinced investors to finance them. The challenges of this approach became clear with the Model 3, a sedan aimed at a broader customer base than its previous cars. Its production problems have weighed on Tesla’s cash flows, leading some analysts to predict that the company will have to raise more money in the markets.
Mr. Musk has said that he does not plan to ask investors for more money in the coming months, and Tesla’s reduced capital expenditure forecast and the new push for profitability appear to be part of his efforts to avoid that. But even if this rough patch passes, and the company makes it through it without raising significant amounts of new capital, investors may be less willing to believe in the next grand vision.
Becoming sensible may save Tesla. But perhaps not its stock price.
adapted from The New York Times
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