Tesla (TSLA) stock fell by three percent in premarket trading. The fall in share price occurred after several outlets shared an internal memo from Elon Musk about layoffs. The memo mentioned an over 10 percent reduction in the global workforce. Tesla had a workforce of 140,473 as of December 2023. A ten percent reduction means that at least 14,000 employees will lose their jobs.
The internal memo first reported by Electrek said that Tesla was looking at “cost reductions and increasing productivity,” which is why the company decided to reduce its “headcount by more than 10 percent globally.”
Elon Musk also thanked those who were “departing Tesla” and those who were remaining “in advance for the difficult job that remains ahead.”
Tesla has faced difficulties these past months, and its share has fallen by 31 percent. CWEB analysts note that although electric cars continue to become popular worldwide, Tesla faces increased competition as Chinese manufacturers build efficient and cheaper electric models for larger markets.
Other factors negatively impacting Tesla sales include the shrinking market in China, where BYD is growing in manufacturing and sales. Smartphone maker Xiaomi is also selling an electric vehicle that it says is comparable to Tesla’s Model 3 at a much cheaper price.
Tesla also faced disruptions in transport through the Red Sea. There was a massive fire in its gigafactory near Berlin. It has also reportedly decreased cybertruck manufacturing in Texas.
Earlier, Tesla reported a fall in deliveries in the first quarter. Although Wall Street had trimmed its estimated deliveries, Tesla’s number fell way below the Street’s estimates to 386,810 deliveries in the first quarter.
Tesla has cut the price of its electric vehicles and almost halved the price of its premier driving assistance, Full Self-Driving (FSD), in the US. Years ago, Tesla said that FSD would be a revenue maker for the future.
Elon Musk’s rhetoric has also allegedly been responsible for some customers moving away from Tesla vehicles to other electric ones.
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