According to media reports, Tesla CEO Elon Musk recently said in an internal letter that Tesla's existing sales and delivery system is becoming cumbersome and inefficient, and can no longer meet the company's business needs.
In order to completely change this situation, Musk decisively announced that Tesla will launch a major organizational optimization initiative, and the company will carry out a global staff adjustment, and the layoff rate is expected to exceed 10%.
Musk's decision has attracted widespread attention and discussion in the industry, and the layoffs are undoubtedly a heavy blow to the laid-off employees, but for Tesla, it is a necessary step for its transformation and upgrading.
Based on Tesla's current global workforce of 140,000, the layoffs are expected to affect more than 14,000 employees, a staggering number, and the layoffs in Chinese mainland are even larger.
According to people familiar with Tesla China, the proportion of layoffs in China is not only far higher than the 10% announced by Musk, but also has reached an astonishing height, especially in the sales department, the impact of layoffs is particularly serious.
According to reliable sources, Tesla has communicated with its stores to determine the list of layoffs, and some departments will optimize personnel by 30% to 40%, while some departments have even reached a 50% layoff ratio.
However, the most affected employees in this layoff turmoil are those who have been working for less than six months, and these new employees have unfortunately become the main targets of this adjustment due to their short employment time and lack of full integration into the company's culture and business system.
Fortunately, in terms of compensation, Tesla also reflects the humane side, and the compensation standard is set at N+3, while the compensation standard for new employees is compensated according to "0.5N+3".
Due to Tesla's generally high basic salary, the amount of compensation received by many laid off employees can reach between 40,000 and 50,000 yuan.
What is the reason for Tesla's large-scale layoffs in Chinese mainland? I think there are two main reasons behind Tesla's layoffs.
The first is that Tesla is facing unprecedented challenges, especially in the competition with Chinese car companies, its situation is becoming more and more difficult, and competing with companies like BYD, Tesla seems to really "roll" up.
In the blue ocean of pure electric vehicles, Tesla once occupied the largest market share and had unlimited scenery, but with the rapid rise of Chinese car companies, especially the sudden rise of BYD, Tesla's position began to waver.
By the fourth quarter of 2023, BYD's pure electric vehicle sales reached 520,000 units, successfully surpassing Tesla's 480,000 units, and entering the first quarter of 2024, Tesla's global delivery volume was only 386,800 units, significantly lower than the previous agency's forecast of 430,000 units.
In the Chinese market, Tesla's sales are nearly 200,000 units behind BYD, and its market share has also dropped from 10.5% in the fourth quarter of last year to 6.7%, a change that not only reflects the fierce competition in the Chinese market, but also highlights Tesla's embarrassing situation in the Chinese market.
In the case of continuous decline in market share, Tesla's production capacity and personnel naturally have a surplus, and in order to cope with this situation, layoffs have become a decision that Tesla has to make.
In the face of strong challenges from Chinese automakers, Tesla's future path is full of uncertainties and challenges, and although this decision is undoubtedly a heavy blow to the laid-off employees, it is a difficult choice for Tesla to make for the company's long-term development.
The second is that Tesla's strategic focus is shifting, when the competition on the old battlefield is too fierce and unsustainable, it needs to bravely open up a new battlefield and seek a broader world, which is the inevitable law of enterprise development.
Tesla's new product line includes not only the Model 2, a highly-anticipated budget hatchback, but also cutting-edge technologies such as FSD (Full Self-Driving) and Robotaxi (Self-driving Taxi).
Among them, the Model 2 is also an important model for Tesla to seize the market in the future, originally planned to be developed based on a new platform and seize the market at a price of $25,000, but with the intensification of market competition, this low-cost car is also facing huge challenges.
You must know that BYD is now planning to develop a model with a price of only $10,000, and the Mexican factory will also start construction this year, and will further reduce the cost of batteries in the future, which undoubtedly puts great pressure on Tesla and makes the future of the Model 2 uncertain.
In this case, Tesla had to make a difficult choice, so there was news that the Model 2 project had been shelved, and then Tesla's strategic focus shifted to more cutting-edge and promising areas such as FSD and Robotaxi.
The new battlefield requires new staffing, and Tesla needs to absorb more talents with innovative capabilities and technical backgrounds to support its continued development in the field of autonomous driving.
Although this is a difficult decision, it is necessary for Tesla, through layoffs and simplification of the system, it can allow Tesla to spit out the old and absorb the new, reserve more talent for the new battlefield, and meet the uncertain challenges of future market competition.
Overall, in the process of continuous pressure from Chinese automakers, Tesla will inevitably face more challenges in the future. So are you optimistic about Tesla's predicament, welcome to comment, like, share, and talk about your views.