Tesla CEO Elon Musk had reportedly proposed a 20% reduction in the company’s workforce. This move was aligned with the decrease in vehicle deliveries observed between the fourth quarter of 2023 and the first quarter of 2024, reported Bloomberg, citing an insider.
Tesla reported delivering 386,810 cars in Q1 2024, marking a 20.1% decline from the previous quarter, representing its most significant quarterly drop in deliveries since 2022.
According to sources familiar with the company’s planning, Bloomberg reported that the actual number of individuals exiting could surpass 20,000.
According to an insider with direct knowledge of his directives, Musk’s rationale was that Tesla ought to trim its workforce by 20% due to a corresponding drop in vehicle deliveries from the fourth quarter to the first quarter.
Musk has signaled on his social media network that the recent moves amount to activating wartime CEO mode. He liked a post saying as much after sending a company-wide email announcing that Tesla was cutting more than 10% of its global headcount, which would mean eliminating at least 14,000 jobs.
Elon Musk has navigated Tesla through numerous challenges before. With a valuation of $469 billion, the company still surpasses the market capitalisation of General Motors Co. or Ford Motor Co. by over nine times. However, with nearly $350 billion lost in market value over four months, both employees and analysts find themselves bewildered and reevaluating the company’s strategy.
Former Employees Sue Tesla
Ex-Tesla employees have filed a lawsuit against the electric car manufacturer for failing to give the mandatory 60-day notice period before their layoffs.
Tesla’s boss Elon Musk said, in an email, last week that there was a lot of duplication of roles in various company positions and there is a need to reduce costs.
Following Musk’s email, approximately 10 percent of the workforce was let go as part of the worldwide downsizing. Additionally, a Bloomberg report indicated that the newly established marketing team in the US, comprising 40 employees, was among those terminated. Furthermore, several individuals in the US carmaker’s design studio were also handed their termination notices.
The lawsuit alleged that this action breached California’s regulations by neglecting to offer the required 60-day notice period. Filed in a San Jose court, the suit against the multinational automaker asserted that it “acted intentionally and with deliberate indifference and conscious disregard to the rights of its employees”.
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