Tesla Inc. has announced it will cut more than 10% of its global workforce, alongside the departure of two key senior executives, marking a significant shift as the company braces for a new phase of strategic reorganization. This move reflects a broader realignment within the electric vehicle industry, which is seeing a slowdown in consumer demand and a recalibration of growth expectations.

Elon Musk, Tesla’s CEO, took to social media platform X to explain the rationale behind the restructuring. “About every five years, we need to reorganize and streamline the company for the next phase of growth,” Musk stated, suggesting that these changes are part of a routine refresh to set the stage for future advancements.

Gene Munster, Managing Partner at Deepwater Asset Management, commented on the developments during an interview on CNBC, emphasizing the cyclical nature of the tech industry and Tesla’s position within it. “We’re talking about people being laid off in the context of a company that’s hit a wall in EV demand,” Munster noted. He elaborated that consumer interest has waned, as evidenced by declining Google Trends data, projecting a potential 3% dip in Tesla’s deliveries for 2024.

“This is a reaction, partly, to the EV demand that has hit the wall,” Munster said. “Ultimately, deliveries in 2024 for Tesla are going to be down. We are on the trough of disillusionment. We will return to growth—the classic hype cycle at play.”

Despite the present challenges, Munster expressed confidence in Tesla’s long-term prospects. “Tesla is still a growth story, just not for the next year,” he asserted. This perspective highlights the temporary nature of the current setbacks and the potential for recovery and expansion in the subsequent years.

The discussion also explored the financial implications of Tesla’s proposed $99 full self-driving package. Munster speculated that with a 20% adoption rate, this initiative could significantly boost Tesla’s revenue by 2028. “If they get 20% adoption, that can double their income by 2028. It’s optimistic for anybody, but if 20% decide to do that separately, eventually all car companies, for safety reasons, will need some form of autonomy,” he explained.

As Tesla navigates these adjustments, the broader automotive industry is also evolving towards incorporating autonomous technologies driven by safety and efficiency. Munster’s insights underscore a pivotal moment for Tesla as it recalibrates its strategies to align with the shifting market dynamics and prepares for its next growth cycle. According to Munster and industry watchers, the future will likely see Tesla emerging from this transitional phase poised for new achievements.