Tesla’s woes have deepened. It is still the world’s most valuable car company, and the shares have recovered from their lows on Monday, but it has had a dreadful first quarter of the year.

It has laid off more than 10 per cent of its workforce, and its revenue was down nine per cent year-on-year, the sharpest fall since 2012. While its market capitalisation was over $500bn in early trading yesterday, it is plausible that later this year it may be passed in value by Toyota, the largest car company in terms of sales, currently worth $375bn.

Tesla shares are down 33 per cent so far this year, while Toyota’s are up 29 per cent. The gap is closing.

Share prices are only a snapshot of the perceptions of the market at one particular moment, often a knee-jerk reaction to hopes (and fears) that turn out to be unfounded.

The recent boost for Tesla has come from Elon Musk’s assertion that it will start to produce more affordable cars, and his promise of further information on 8 August.

An entry-level Model 2 is known to be under development, and the pencilled-in selling price for the US market will be below $25,000. Elon Musk has been able to surprise the markets with new products before, notably the hugely successful Model 3.

The new Performance version of that will reach 60 mph in 2.9 seconds, something that gets close to the fastest 911 Porsche, which manages to hit 100 kph – that’s 62 mph – in 2.7 seconds. UK drivers may think that this is all a bit irrelevant as they struggle through the jams on the M25, but if that is what the market wants, then Musk has another winner.

And if he can produce a sub-compact, the Model 2, which also offers extraordinary performance, then the world may indeed continue to beat a........

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