Tesla trims 10% of workforce - delayed layoff to reduce cost and increase productivity
1) The first article reported that some employees have detailed Tesla’s plans to lay off about 10 percent of its workforce this week, alongside high-profile departures from two company executives. Tesla employees were informed that they were being laid off early Monday morning, according to an email sent to impacted workers that was obtained by Teslarati.
Along with the layoffs, two Tesla executives announced their departure on Monday morning. Drew Baglino, Tesla Senior Vice President of Powertrain and Energy Engineering, announced his departure after 18 years at the company, just hours before Rohan Patel, Vice President of Public Policy and Business Development, announced his own departure after eight years. Patel’s departure also comes after the executive had become particularly vocal on X in the past few months, responding directly to customer and fan inquiries on the platform.
2) The second article reported that Tesla CEO Elon Musk said the company has to “reorganize and streamline the company for the next phase of growth” every five years after at least 10 percent of its global workforce was trimmed, and two key executives left the automaker on Monday. Tesla has been preparing to enter a new phase of growth within its automotive business as competition increases and it realizes a critical need to update its product portfolio. As Tesla prepares for the next growth phase, the name of the game is cost reductions and increases in productivity. Layoffs are an unfortunate part of this process, and somewhere between 10 and 20 percent of Tesla’s global workforce was eliminated. It remains unclear as to what Baglino and Patel’s reason for leaving was at this point. Both said they plan to take time off and be with family.
3) The third article showed the history of Tesla's layoff by Sayer Merritt:
2017: 2% of headcount
2018: 9% of headcount
2019: 7% of headcount • 2022: 10% of salaried workers (3% of global headcount)
2024: ~10% of headcount
Merritt commented that Tesla's global employee count expanded from 38,000 in early 2018 to over 140,000 in early 2024. Laying off ~10% of your workforce is not a small number, but Tesla's last major round of layoffs was a while ago. Many companies were doing large job cuts between late 2022 to late 2023, but Tesla didn't. Merritt who shares insightful content on electric vehicles, breaking news, technology, sustainable living, and environmental conservation.
My take: I think the layoff is expected - a restructuring strategy of a large company at a time when global demand for electric vehicles is down. Looking at the history, Tesla tried to avoid layoffs in 2023 when inflation was at an all time high - a right move but was inevitable eventually. High profile executives were not spared. The layoff came before the report of the Q1 earnings is a sign that Tesla is committed to protect the benefits of shareholders. Tesla will be reporting the earnings on 23 April 4:30 pm -5:30 pm (EST) which I'll make a separate post on this matter.
Market reaction: All major EV stocks like BYD, Li Auto, Rivian, Nio and Xpeng share prices were down 2-8% which was abnormal. Tesla was down 5.6% at market close, BYD ADR price was down 2.27%, Rivian was down 8% and Nio hit 52-week low 3.820 USD (down 5.3% and first time hit below 4 USD since June 2020). I think the stock market overreacted because of geopolitical tension escalation in the middle east war and WWIII coming rumour, not due to the layoff news. Someone who is negatively bias against Tesla will use the opportunity to further speculate fear and uncertainty about the company as usual.
$BYD COMPANY(01211.HK$ $BYD Co.(BYDDF.US$ $S&P 500 Index(.SPX.US$ $Nasdaq Composite Index(.IXIC.US$ $Tesla(TSLA.US$ $VOLKSWAGEN A G(VWAGY.US$ $NIO Inc(NIO.US$ $Li Auto(LI.US$ $XPeng(XPEV.US$ $General Motors(GM.US$ $Ford Motor(F.US$ $Rivian Automotive(RIVN.US$ $MERCEDES-BENZ GROUP AG(MBGAF.US$ $TOYOTA MOTOR CORP(TOYOF.US$ $GEELY AUTO(00175.HK$ $Stellantis NV(STLA.US$
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I reflected trading experiences by writing journals. My comments are for educational purposes not financial advice.
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ZnWCOP : All major EV stocks like BYD, Li Auto, Rivian, Nio and Xpeng share prices were down 2-8% which was abnormal. Tesla was down 5.6% at market close, BYD ADR price was down 2.27%, Rivian was down 8% and Nio hit 52-week low 3.820 USD (down 5.3% and first time hit below 4 USD since June 2020). I think the stock market overreacted because of geopolitical tension escalation in the middle east war and WWIII coming rumour, not due to the layoff news. Someone who is negatively bias against Tesla will use the opportunity to further speculate fear and uncertainty about the company as usual.
ZnWCOP : Ark Invest bought 32.70K Tesla's share worth $5.59 million
https://www.moomoo.com/community/feed/112275995492358?share_code=00SOTE