Tesla Announces Global Mass Layoffs And Shares Plummet: Elon Musk Cites Sales Collapse And Increased Competition With BYD In Electric Vehicle Market As Reason For Production And Staff Cuts

Elon Musk’s Tesla Attributes Employee Layoffs To Decline In Global Electric Vehicle Deliveries Due To Strong Competition From Rivals Like BYD

According to information reported by Valor Investe, Tesla announces a layoff of 10% of its employees. An internal memo from Elon Musk’s automaker, a leader in electric vehicle manufacturing, cites declining sales and increased competition in the electric vehicle market, for example, BYD, as the reason for the layoffs. The total number of employees affected by the measure has not been disclosed.

Elon Musk mentioned the need to cut costs at Tesla. According to an anonymous source familiar with the matter, some layoffs have already been communicated to employees.

Elon Musk’s Company Had 140,473 Employees Globally Until December 2023

In the memo, Musk emphasized that it is the time for the company to take measures aimed at financial balance and preparation for the future. “As we prepare the company for our next phase of growth, it is extremely important to analyze all aspects to reduce costs and increase productivity. As part of this effort, we conducted a thorough analysis of the organization and made the difficult decision to reduce our workforce by over 10% globally”, Elon Musk stated in a memo sent to employees.

According to Tesla’s latest annual report, the company had 140,473 employees globally until December 2023. The automaker has not yet issued an official statement regarding the cuts.

Rivals Like BYD Negatively Impacted Tesla’s Financial Results

After registering the first decline in global electric vehicle deliveries in the first quarter of 2024 in almost four years, Tesla announces layoffs. The automaker attributes the decline to price cuts, necessary due to strong competition from rivals like BYD, which negatively impacted financial results.

Although electric vehicle sales continue gaining popularity globally, the growth rate of these sales has slowed, especially for Tesla. The company delivered about 387,000 vehicles in the first quarter, representing a decline of nearly 9% compared to the previous year and falling about 20,000 units below Wall Street’s lowest estimates. This disappointing result came weeks after Tesla reduced production at its Shanghai facilities in March.

In the last quarter of last year, the gross profit margin was only 17.6%, the lowest in over four years. Elon Musk acknowledged that the company expects a slowdown for 2024, following a period of rapid sales growth.

Tesla (TSLA34) Shares Drop 5% With Layoff Announcement And Accumulate Losses Of Over 30% For The Year

Tesla shares closed down more than 5% on Monday on Nasdaq, following the announcement that Elon Musk’s company will lay off more than 10% of its global workforce, representing at least 14,000 employees. The Nasdaq index recorded a decline of 1.79%, closing at 15,885.02 points. With Monday’s trading, Tesla shares have accumulated a drop of over 30% for the year.