Tesla just broke out yesterday a global layoff, and the China region was not spared this time, and it seems that the attrition mode has started just overnight. "The sales post, the line manager talked to me today, and I don't know how much to lose. On the morning of April 16, on a workplace social software, a netizen whose information was an employee of Tesla Sales Service (Shanghai) Co., Ltd. wrote. It alleges that the layoffs were given at short notice. "It sounds like I'm in a hurry, but it seems that the KPI is to get everyone on the list today. The netizen said.
According to Phoenix.com, Tesla's layoff rate in China is far more than 10%, and the sales department is the "hardest hit area" of the layoffs. The media quoted sources familiar with the matter as saying that some departments will optimize the layoffs by 30 to 40 percent, some departments by 50 percent, and other departments will generally be at 20 percent. However, this information has not yet been confirmed. Compensation ranges from N+1 to N+3. "Leaving after the day is N+3. The above-mentioned person familiar with the matter said. According to a car self-media, Tesla has been communicating with stores about the list of layoffs, and basically every store has people laid off, and the layoff standard is N+3.
It is worth noting that there is no official response to this news at present, and the authenticity is yet to be verified.
On the other hand, Tesla's internal announcement of layoffs has just been announced. The day before (April 15), Tesla CEO Elon Musk mentioned in an internal email to all employees that the company will lay off more than 10% of its global workforce in order to cut costs and improve productivity. As of December 31, 2023, Tesla had a total of 140,473 employees worldwide. This means that Tesla's layoffs will affect more than 14,000 people.
"There's nothing I hate more than this [layoffs], but it has to be done. This will allow us to be lean, innovative and eager for the next growth phase cycle. Musk said in an email. As for the reason for the layoffs, Musk said in an internal email that there is currently an overlap of roles and job functions in some areas of Tesla. And as Tesla prepares for the next phase of the company's growth, it is extremely important to look at all aspects of the company to reduce costs and increase productivity. To this end, Tesla conducted a thorough review of the organization and made the "difficult decision" to lay off employees.
In addition to the ongoing layoffs, Tesla's senior vice president, Drew Baglino, is leaving the company. Baglino worked at Tesla for 18 years and was one of Tesla's earliest employees. It is responsible for its core businesses of batteries, motors, drive units, power electronics and energy products. In addition, according to Yicai, Tesla's vice president of public policy, Rohan Patel, will also leave the company.
However, it is unclear whether the departure of the two executives is related to the layoffs. Michael Ashley Schulman, chief investment officer at investment advisory firm Running Point Capital Advisors, noted that the departures of the two executives showed "significant headwinds during Tesla's significant growth phase" and that it saw it as a "bigger negative signal" than announcing layoffs.
And overnight, the "list" has been prepared in the Chinese region and has begun to be put into practice, which can only say that Tesla's efficiency is too high. However, the layoffs may have been prepared a month in advance.
Tesla's layoffs around the world have actually been foreshadowed. According to relevant media reports, in February this year, Tesla postponed the performance appraisal of some employees, and then rumors of Tesla's layoffs began to appear. According to foreign media reports, a Tesla China executive revealed that in recent months, the company has asked them to identify positions that are critical to the team and have been asked to rank team members according to their performance.
According to incomplete statistics, from 2017 to 2023, Tesla laid off employees 4 times. Among them, in 2017, Tesla laid off 2% of its total workforce, in June 2018, Tesla announced that it would lay off 9% of its workforce, in 2019, Tesla announced another 7% of its workforce, and in 2022, Tesla made a layoff of 3% of its workforce, followed by this layoff. From this point of view, this is also the largest layoff in Tesla's history.
As far as the reasons for the layoffs are concerned, the outside world generally believes that Tesla's global layoffs are related to the decline in sales. In the first quarter of this year, Tesla delivered a total of 386,800 vehicles worldwide, a new low in the past five quarters. Among them, the delivery of Model 3 and Y was 369,800 units, a year-on-year decrease of 10%, lower than the estimated 420,000 units.
Although Tesla explained that the decline in sales was partly due to the early stages of production of the upgraded Model 3 at the Fremont plant, as well as the shutdown of the factory due to geopolitical factors caused by the diversion of transportation. But with deliveries well below analysts' expectations, January-March of this year is considered a rather disastrous quarter for Tesla. CNN believes that the layoffs are the latest example of Tesla's impact on increased competition in the electric vehicle industry and weak global demand.
And in the Chinese market, Tesla is actually under more pressure. This is Tesla's second-largest market in the world. In the first quarter of this year, Tesla delivered 220,900 vehicles in China, slightly lower than the 229,300 units in the same period last year. With the rapid launch and iteration of self-owned brand smart electric vehicles such as Zhijie S7, Xiaomi SU7, and Zeekr 001, the competitiveness of Tesla's main sales models in China, Model 3 and Model Y, is no longer as good as before, and the Model 2, which is regarded as a new growth point for Tesla's sales, is still far away. On the other hand, with the involution of car prices, the stimulus effect of Tesla's price reduction move has actually become limited. Together, these factors have contributed to Tesla's sales growth in China.
For the second-quarter sales performance, Robert W. Baird analyst Ben Kallo predicts that Tesla's second-quarter sales may decline again after an unexpected decline in sales in the first quarter of 2024. In the research report, Kallo pointed out that Tesla is still facing the problem of a relatively high base this quarter, and it is expected that Tesla will deliver 444,510 vehicles in the second quarter, a decrease of 4.6% from the same period last year.
The global layoffs have also directly affected Tesla's stock price. As of the close of local time on the 15th, Tesla's share price fell 5.59% to $161.48 per share, with a total market capitalization of about $514.2 billion. Dan Ives, an analyst at Wedbush Securities, believes that Musk needs to explain the latest layoffs in order to regain investor confidence.