Tesla, Inc. (NASDAQ:TSLA), which has been buffeted by fundamental issues, is looking to trim its workforce, according to a report that surfaced late Sunday.
What Happened: Tesla has notified regarding of a shortening of Cybertruck production shift at the Giga Texas factory even as the electric-vehicle giant is bracing for a round of layoffs this week, Electrek reported, citing reports from employees.
The job cuts being contemplated would be in the order of up to 20% reduction, and in absolute terms it could mean tens of thousands of employees, the report said.
Tesla is yet to respond to Benzinga’s email seeking confirmation regarding the report.
Amid the economic uncertainties, Tesla was among the earliest to announce job cuts in 2022. CEO Elon Musk said in an email to employees that he was planning to cut 10% of the salaried workers but assured that corporate action will not affect those building cars, battery packs or installing solar. Hourly headcount will increase, Musk had said then.
Later in late-2022, rumors said Tesla was planning to freeze hiring and would announce more job cuts in the first quarter of 2023.
In February 2023, Tesla let go of dozens of employees in Buffalo, New York, who labeled data for its driver-assistance system Autopilot, although the company denied firing them. A year later, in February 2024, the company set off worries by asking managers to confirm which of those jobs below them were critical.
The 10-K report filed with the SEC showed that as of Dec. 31, 2023, Tesla’s employee headcount worldwide was 140,473.
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Why It’s Important: Tesla’s fundamentals have faltered since 2022 amid an inclement interest rate environment, slowing EV adoption and the company’s own missteps in tackling the extraneous risks. The company’s volume growth has tapered off and in the first quarter, and it reported its first year-over-year sales decline since the COVID-19-hit second quarter of 2020.
As Tesla went about recklessly cutting EV prices, setting off a price war in the industry, its core auto gross margin suffered.
Adding fuel to fire, the management’s lack of communication and fears regarding Musk’s divided focus on his flagship venture have weighed on the stock. Tesla is now among the worst-performing S&P 500 stocks in a market, which trades just off its all-time highs.
Tesla further confounded stakeholders with an announcement from Musk regarding robotaxi unveil. This came just after a report that said the company could be putting on the backburner its sub-$30,000 EV, on which many analysts rested their hopes in.
More details could be known when the company reports its first-quarter results on April 23.
Tesla ended Friday’s session down 2.03% at $171.05, according to Benzinga Pro data. The stock has lost about 31% year-to-date.
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