More Than 10% Of Tesla’s Employees Will Be Let Go: Report

According to a tech magazine, Electrek, which cited an internal letter, Tesla (TSLA.O.) will lay off almost 10% of its personnel on Monday. This comes as the leading automaker faces challenges from tepid demand for its electric cars in a fiercely competitive industry.

According to the source, Tesla has halted certain stock incentives, canceled some workers’ yearly evaluations, and instructed managers to identify important team members during the last several months.

according of December 2023, the biggest carmaker in the world by on market value employed 140,473 people worldwide, according per its most recent annual report. About 15,000 employees will be impacted by the projected reduction.

4% of Tesla’s workers was let off in February of last year in New York as part of a performance evaluation cycle, just before its employees were scheduled to begin a union drive.

CEO Elon Musk said in the internal letter that “it is extremely important to look at every aspect of the company for cost reductions and increasing productivity as we prepare the company for our next phase of growth,” as reported by Electrek.

When a comment was requested, Tesla did not immediately answer.

Tesla announced a drop in car deliveries in the first quarter, which was both below market estimates and the company’s first in over four years. Tesla is scheduled to release its quarterly profits on April 23.

In the meanwhile, the business has given up on its intentions to create a cheap vehicle, giving up on Musk’s long-standing objective of producing mass-market EVs at a reasonable price.

On Monday, Tesla’s stock fell 0.3% in premarket trade.

Tesla is preparing for a downturn in sales in 2024 after years of strong growth that helped the firm become the most valuable carmaker in the world.

The EV manufacturer has been sluggish to update its outdated models as rising interest rates have reduced customer demand for expensive goods, while competitors in China, the biggest car market in the world, are releasing more affordable models.

The business wants to strengthen its margins, which have taken a hit due to frequent price reductions.

In the fourth quarter, it reported the lowest gross profit margin in almost four years, at 17.6%.