Is the global EV bubble bursting? As global demand starts to slow, share prices tank and Tesla cuts 10% of the workforce....are car giants ready to slam the breaks on electric revolution?

Elon Musk's announcement that Tesla will lay off ten percent of its workforce shocked many but it may be inline with figures that suggest the global demand for electronic vehicles is slumping across the world. 

In the first quarter of 2024, the two biggest manufacturers of electronic vehicles, Tesla and its Chinese rival BYD reported dramatic sales drops compared against the same time last year. 

BYD cut prices on its vehicles across China accompanied with a catchy slogan: 'Electricity is cheaper than oil,' in order to help stem the tide. 

Since last year, Tesla has also been slashing prices, as much as $20,000 on some models. The price cuts caused used electric vehicle values to drop and clipped Tesla's profit margins.  

According to a Financial Times report on the slump, legacy car industry leaders have maintained for years that the average consumer isn't ready for electronic cars. 

In October, General Motors abandoned plans to have 400,000 hybrid vehicles ready for sale by mid 2024 even though EV sales were up on quarter-on-quarter throughout last year. Ford also announced a slow down in production.

Tesla's sales were down eight percent in the first quarter of 2024 compared against 2023 and 20 percent lower than what was delivered in Q4 in 2023. In addition, its market share in the US was down to 42 percent during Q3 in 2023.  

The company anticipated to sell more despite founder and CEO Elon Musk already saying that growth would be 'notably slower' this year. The company plans to reveal an autonomous robotaxi at an event in August.

BYD meanwhile saw its sales fall a massive 42 percent compared against the fourth quarter to 300,000, allowing Tesla to usurp the crown of biggest electric vehicle maker in the world, for a time anyway.

In China, one in three new cars sold are electric, in the rest of the world it's one in five.  

At the height of the Covid-19 pandemic, Tesla was valued on the stock exchange at around $1 trillion. It's now worth about half that. 

'While we were anticipating a bad quarter, this was an unmitigated disaster that is hard to explain away,' analyst Dan Ives told the FT in the wake of Musk's announcement this week.  

Another analyst, Tom Narayan, told the website that the company's most popular cars, the Y and 3, are 'saturated products.' 

Potential market saturation is not deterring GM, who despite slowing down production, still plans to build one million electric vehicles per year by 2025. Ford is targeting 600,000 per year from 2024. 

GM was one of the automakers impacted by the 2023 United Auto Workers strike which cost the company a total of $9 million in the second half of last year. 

European car giant Volkswagen saw a decline of 3.3 percent in its electric department compared against 2023's first quarter. The 136,400 sales accounted for 6.5 of the company's total sales. 

Volkswagen says that it is expected to sell at least 160,000 in the second quarter. In 2023, the German company sold 771,000 electric vehicles, up 35 percent from 2022. 

Unlike Tesla, which sells the majority of its cars in the US and BYD which does likewise in China, Volkswagen is dependent on the western European market where sales in general were down for electric vehicles in the first quarter. 

Between January and March, Volkswagen sold nearly 75,000 electric cars in Europe and just 13,000 in the US. 

In October,  Volkswagen joined a chorus warning that demand for electric vehicles

The market not developing as expected, with the German group's own order intake for EVs down to 150,000 in Europe from 300,000 last year.

Of the major electric vehicle manufacturers, only BMW saw a jump in sales in the first quarter, but the German auto giant's share price still fell.

Sales of electric vehicles were at 82,700 during the first three months of the year. 

 Hyundai's sales in March were down 3.7 percent from the same time last year and down nearly two percent across Q1 compared against the same time.  

Former Ford, Chrysler and General Motors executive Bob Lutz said this week that the drive toward electric cars needed to be gradual, and vehicle charging times and the charging infrastructure across the US have been major issues in widespread adoption.

'We all agreed that the EV revolution was not going to take place, and instead what we would have is an EV evolution,' Lutz said in an interview with Fox Business.

Lutz told Fox Business: 'The problem with the whole EV movement is that there was a colossal amount of hype behind it, largely from what I like to call the liberal mainstream media, making it sound like everybody's next vehicle was going to be an EV.'

'And of course, the government was pushing it, because of their climate change policies. And it just plain wasn't going to happen.' 

The slowdown is to be expected, according to a study from Adamas Intelligence.

'A slowdown from the breakneck pace of recent years is perfectly expectable... Over 19.2 million EVs, including plug-in and conventional hybrids, were registered globally last year, 4.6 million more than in 2022,' the group said. 

In December, Bloomberg predicted sales of around 16.7 million electric cars in 2024. Just six months earlier, the same analysts predicted sales of 17 million. 

'The slowdown in the ambition from the two of the Big Three US automakers, combined with Tesla's aging model lineup limiting its growth potential, and tougher economic conditions for many of the US customers, indicate that the US EV market is facing a more difficult year,' analyst Aleksandra O'Donovan wrote. 

 Bloomberg anticipates that the growth in 2024 for the EV market will be around 32 percent, down from 47 percent in 2023. The report mentions emerging markets of India and Thailand as gaining in popularity in their respective countries. 

The November U.S. presidential election puts the White House's EV subsidies and emissions rules at risk, however. 

Most legacy automakers lose money on EVs and hybrids are a more profitable path to reducing CO2 emissions if a future administration changes course, analysts said.

'Hybrids are a big hedge against an administrative change that cools down the push from a regulatory standpoint,' said Mark Wakefield, head of AlixPartners' global automotive practice.

Supporters of strong limits on combustion-engine emissions are concerned the Biden administration could offer incentives for automakers to sell more plug-in hybrids with combustion motors. 

'If the hybrids are flying off the lot, there is no need for EPA (the Environmental Protection Agency) to further encourage their sale with loopholes that allow more pollution,' said Dan Becker of the Center for Biological Diversity in Washington.

Led by Toyota, Ford and Honda, North American production of hybrids could rise to as much as 20% of total light-vehicle production by 2025, compared with 14% for EVs, according to data provided to Reuters by AutoForecast Solutions.

'While the EV outlook has been depressed by about a million units in the last year, hybrid models have surged by roughly the same volume,' AFS Vice President Sam Fiorani told Reuters in March.   

Musk detailed his job cuts in a memo sent to employees Monday. The layoffs could affect about 14,000 of the 140,473 workers employed by the Austin, Texas, company at the end of last year.

Musk's memo said that as Tesla prepares for its next phase of growth, 'it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,'    

The New York Times and CNBC reported. News of the layoffs was first reported by electric vehicle website Electrek.

Also Monday, two key Tesla executives announced on the social media platform X that they are leaving the company. 

Andrew Baglino, senior vice president of powertrain and energy engineering, wrote that he had made the decision to leave after 18 years with the company.  

Rohan Patel, senior global director of public policy and business development, also wrote on X that he was leaving Tesla, after eight years.

Baglino, who held several top engineering jobs at the company and was chief technology officer, wrote that the decision to leave was difficult. 'I loved tackling nearly every problem we solved as a team and feel gratified to have contributed to the mission of accelerating the transition to sustainable energy,' he wrote.

He has no concrete plans beyond spending more time with family and his young children, but wrote that he has difficulty staying still for long.

Musk thanked Baglino in a reply. 'Few have contributed as much as you,' he wrote.

Shares of Tesla fell 4.8 percent Monday afternoon, hours after news of the layoffs and departures broke. Shares of Tesla Inc. have lost about one-third of their value so far this year as sales of electric vehicles soften.

Tesla sales fell sharply last quarter as competition increased worldwide, electric vehicle sales growth slowed, and price cuts failed to draw more buyers. 

The company said it delivered 386,810 vehicles from January through March, nearly 9% below the 423,000 it sold in the same quarter of last year. 

Since last year, Tesla has cut prices as much as $20,000 on some models as it faced increasing competition and slowing demand. The price cuts caused used electric vehicle values to drop and clipped Tesla's profit margins.

The company has said it will reveal an autonomous robotaxi at an event in August.