In a continuation of its global workforce reduction strategy, Tesla has announced plans to lay off an additional 601 employees in California, according to a notice filed with the state government.
This move is part of a broader series of job cuts that began a month ago, driven by declining sales and increasing price competition in the electric vehicle market.
The latest round of layoffs will affect workers at Tesla’s facilities in Palo Alto and Fremont, starting within 14 days beginning on June 20, 2024, as indicated in the company’s Worker Adjustment and Retraining Notification (WARN) notice.
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Tesla’s CEO, Elon Musk, announced on April 15 that the company would reduce its global workforce by more than 10%. At the end of 2023, Tesla employed over 140,000 people worldwide. Musk’s broader vision reportedly includes slashing up to 20% of the company’s headcount, according to sources familiar with the matter.
Impact on Workforce and Operations
The electric vehicle maker has been steadily reducing its workforce across various divisions, including significant cuts in its advertising unit. Last month, Tesla revealed it would lay off 6,020 employees in California and Texas. This followed earlier layoffs of 285 employees at its Buffalo, New York facilities, which are integral to the labeling team for its Autopilot driver assistance software and the production of fast-charging equipment.
The latest layoffs come on the heels of the firing of 500 employees responsible for expanding Tesla’s Supercharger network, a critical infrastructure for the company’s electric vehicles. Despite the layoffs, Musk announced plans to invest over $500 million in expanding the Supercharger network this year. This investment is crucial as the company continues to promote its Superchargers, which can add up to 200 miles of range to a Tesla vehicle in just 15 minutes.
Historical Context and Future Plans
Tesla’s recent layoffs are part of a recurring pattern. In addition to the current workforce reduction, the company has also seen significant cuts in previous years: about 3.5% of its staff in 2022, 3,000 workers in 2019, and roughly 9% of the workforce in 2018.
Tesla’s challenging year is reflected in its share price, which has dropped approximately 26% year-to-date. The company also reported lower-than-expected delivery numbers in early April, marking the first time it has underperformed in deliveries since 2020.
However, given the strategic importance of the Supercharger network, concerns have arisen over the implications of laying off workers in this division. In response, Musk has initiated rehiring efforts to mitigate the impact on the network’s expansion and ensure the company meets its infrastructure goals.
In 2024, Tesla is undergoing significant restructuring to adapt to market pressures and competitive challenges. The additional layoffs in California are part of Tesla’s broader strategy to streamline operations and reduce costs amid falling sales and heightened competition.
However, with substantial investments planned for critical infrastructure like the Supercharger network and efforts to rehire key workers, Tesla aims to balance its workforce reductions with strategic growth initiatives.
The ongoing job cuts underscore the volatility and competitive nature of the electric vehicle market, amid the downturn in China – one of Tesla’s largest markets – following increased competition from domestic EV makers such as BYD, which toppled Tesla in production for the second year in January.