21st Century Business Herald reporter Zheng Zhiwen reports from Shanghai
On April 15th, Tesla CEO Musk sent a letter to all Tesla employees announcing that the company would lay off 10% of its employees globally. Tesla's stock price closed down 5.6% on Monday, reaching its lowest closing level in nearly a year.
As of the time of publication, Tesla China has not responded to questions from 21st Century Business Herald reporters about whether Tesla's global layoffs include employees in the China region and their proportion.
As of December 31, 2023, Tesla's global workforce was 140473, and a 10% layoff means 14000 people will be affected.
Musk pointed out in an internal letter that with the rapid development of the company, there has been overlapping roles and job functions in certain fields. "As we prepare for the next stage of the company's development, it is extremely important to examine all aspects of the company in order to reduce costs and improve productivity."
According to relevant media reports, in February this year, Tesla postponed the performance evaluation of some employees, and rumors of Tesla layoffs began to emerge. Previously, Tesla had to lay off employees due to the sluggish macro environment and aggressive personnel expansion resulting in low efficiency. In June 2022, Musk released an internal email titled "Suspension of Global Recruitment", expressing negative views on the economy, stating that the company would lay off 10% of its workforce and suspend global recruitment. Soon, Tesla China was exposed to have implemented a layoff plan, with a layoff rate of around 10%, but this layoff plan does not involve the production and manufacturing side.
In this internal letter, Musk said, "There is nothing that I hate more than this (layoff) decision, but we must do so. This will enable us to strive for excellence, innovate courageously, remain thirsty, and prepare for the next growth phase cycle."
It is reported that Tesla Senior Vice President Drew Baglino resigned after the news of layoffs, making it the second senior executive at Tesla to resign in nearly eight months. Bagrino is responsible for the engineering and technological development of Tesla's batteries, motors, and energy products. He has worked at Tesla for 18 years and has co appeared with Musk at multiple events, including Tesla Investor Day a year ago. In addition, another key figure of Tesla, Rohan Patel, Vice President of Public Policy and Business Development, also posted on social media that he had left the company.
On April 2nd, Tesla released its Global Production and Delivery Report for the first quarter of 2024, which showed that Tesla produced 433371 electric vehicles in the first quarter of 2024, a year-on-year decrease of 1.7%; Delivered 386810 electric vehicles, a year-on-year decrease of 8.5%, far below Wall Street's expectations.
Dan Ives, a renowned Tesla bull at Wedbush Securities, warns that layoffs are an ominous signal for Tesla, indicating that it will face difficult times in the future, as reflected in Monday's decline. He pointed out, "Global demand has been weak, and unfortunately, this is a necessary measure for Tesla to cut costs in the face of weak growth prospects."
In addition to reducing costs and increasing efficiency through layoffs, according to internal sources, Tesla has told Cybertruck employees that the shift time on the production line at the Austin Superfactory in Texas, USA will be shortened. Previously, workers implemented a 12 hour shift system, working from 6 a.m. to 6 p.m. and from 6 p.m. to 6 a.m. There will be 11 hour shifts during the day and 10.5 hour shifts at night: from 6am to 5pm, and from 6pm to 4:30am. This new schedule has been internally announced on the 11th of this month and will take effect on the 14th of this month.
However, some analysts have pointed out that layoff announcements are not a bad thing. CFRA analyst Garrett Nelson said in an interview with overseas media, "In the context of a slowdown in electric vehicle growth, layoffs will be consistent with actions taken by other automakers, especially pure electric vehicle manufacturers such as Rivian and Lucid. We believe this news is a sign of the times, but the fact that Tesla is taking action to reduce costs during an economic slowdown should have a positive impact on profitability."