In a recent development, Tesla CEO Elon Musk is reportedly pushing more resources into the development of robotaxis and self-driving technology, leading to concerns among Wall Street analysts. As a result, Tesla's stock (TSLA) fell 2.7% on Tuesday, reaching its lowest closing level in almost a year. The stock is now down 8.3% since the beginning of the week, following the announcement of a "more than 10%" staff reduction on Monday.

The continued slide in Tesla's stock price comes in the wake of further revelations regarding substantial cuts to specific divisions within the company. These cuts indicate a riskier bet by Elon Musk on robotaxis and autonomous software. Although the staff reductions were initially attributed to the duplication of roles and job functions resulting from rapid growth, later reports from Tesla sources suggest that the job cuts exceeded 10% and disproportionately affected certain divisions. For instance, heavy layoffs were reported in Tesla's service center division, China sales team staff, and at least 140 engineers in the US.

According to Electrek, Tesla's layoffs were also used as an opportunity to discontinue several projects that Musk no longer supported, including the development of a lower-cost next-generation electric vehicle (EV) known internally as "NV9." This cancellation is interesting considering that investors and analysts had been looking forward to Tesla's rumored next-gen vehicle, which was expected to have a starting price of around $25,000. Although Musk denied reports of the cancellation, the recent focus on robotaxis suggests that the launch of the cheaper EV may have been postponed indefinitely or entirely scrapped.

Simultaneously, Tesla is intensifying its efforts in artificial intelligence (AI) by building data centers using its Dojo supercomputers. One data center is being constructed in New York to boost AI capabilities for the development of self-driving software, which would form the backbone of Tesla's robotaxis. Another data center is being established as part of an ongoing expansion at the factory. These expansions reflect Tesla's commitment to advancing its AI capabilities.

The departure of Drew Baglino, a longtime Tesla executive and Senior Vice President of powertrain and energy engineering, also indicates a strategic shift. Baglino played a vital role in significant Tesla projects, including the production of the "4680" battery cell and cathode facility at Giga Austin. His departure is seen as unexpected and raises concerns about Tesla's Model 2 initiative in the coming years.

The market response to Tesla's focus on robotaxis and full self-driving (FSD) software has been mixed. While some investors have expressed optimism about the potential growth opportunities, others raise concerns about the risks involved. Deutsche Bank analyst Emmanuel Rosner warned that if Tesla were to sacrifice the Model 2 for the robotaxi program, it would introduce a higher risk profile for the company and potentially diminish its appeal to shareholders. Morgan Stanley's Adam Jonas voiced similar apprehensions, expressing doubts about Tesla's ability to achieve commercial scale in the robotaxi sector within a timeline that aligns with most investors' expectations.

Despite these concerns, some analysts still maintain a positive long-term outlook for Tesla. Morgan Stanley's Jonas believes that business units such as "Tesla Mobility" and "Tesla Network Services," which encompass rideshare, robotaxis, and self-driving initiatives, contribute significantly to the company's overall value. These units account for $165 of Morgan Stanley's $310 price target, whereas the core automotive business is valued at only $62.

As Tesla's stock continues to face downward pressure, it remains to be seen how the company's emphasis on robotaxis and FSD will shape its future trajectory. Investors and analysts closely watch as Tesla navigates the challenges and opportunities presented by its ambitious vision for the future of transportation.