Achi news desk-
Tesla will lay off more than 10 percent of its global workforce, an internal memo seen by Reuters on Monday shows, as it grapples with declining sales and an intensifying price war for electric vehicles.
The world’s largest carmaker by market value had 140,473 employees globally in December 2023, its latest annual report shows. The memo did not say how many jobs would be affected.
Some staff in California and Texas have already been notified of layoffs, a source familiar with the matter told Reuters, declining to be named because of the sensitivity of the subject.
“As we prepare the company for the next phase of our growth, it is extremely important to look at all aspects of the company to reduce costs and increase productivity,” Tesla CEO Elon Musk said in the memo.
“As part of this effort, we have conducted a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10 percent globally,” he said.
Tesla did not immediately respond to a request for comment.
Stock is down about 31 percent so far this year
Its shares were down 1.3 percent in premarket trading.
The stock is down about 31 percent so far this year, underperforming legacy automakers such as Toyota Motor and General Motors, whose shares have risen 45 percent and 20 percent respectively thanks to a slow consumer shift away. of traditional internal combustion engine vehicles.
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Energy giant BP has also cut over a tenth of the workforce at its electric vehicle charging business after a bet on rapid growth in commercial EV fleets failed to pay off, Reuters reported on Monday, underscoring the wider impact of a slowdown the demand for EV.
“Tesla is maturing as a company and it’s not the growth story it used to be,” said Craig Irwin, senior research analyst at Roth Capital.
“Layoffs suggest management expects weak demand to continue.”
Layoffs could be cost cutting ahead of new models
Still, Pedro Pacheco, vice president of research and automotive at Gartner, said the cuts could be a sign of the company trimming costs before releasing new models, as sales slow from the strong growth it drove by the launch of the Model Y. and Model 3.
Tesla reported this month that its global vehicle deliveries in the first quarter fell for the first time in nearly four years, as price cuts failed to stir demand.
The EV maker has been slow to renew its aging models as high interest rates have dampened consumer appetite for big-ticket items, while rivals in China, the world’s largest auto market, are rolling out cheaper models.
Reuters reported this month that Tesla had canceled a long-promised low-cost car that investors had been counting on to drive mass market growth. Musk denied the report, but did not point out any specific inaccuracies.
The company is looking to increase its margins, which have been trimmed by repeated price cuts, particularly in China where it faces stiff competition from local rivals including market leader BYD, which overtook the company of the US briefly as the world’s fourth largest electric vehicle manufacturer. quarter, and newcomer Xiaomi.
Tesla recorded a gross profit margin of 17.6 percent in the fourth quarter, the lowest in more than four years.
Tesla laid off four percent of its workforce in New York in February last year as part of a performance review cycle and before a union campaign was launched by its workers.
Tech publication Electrek first reported the latest job cuts.
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