Tesla is said to have started a review within the company to assess how important each employee's role is, leading to concerns about potential layoffs.
Tesla Asking One-Liner Questions to Managers
As reported by Bloomberg, managers in the U.S. were sent a brief email asking them to evaluate their deputies' roles with a simple yes or no question after canceling some biannual performance evaluations. This request was made despite Tesla still having hundreds of job openings listed on its website.
Billionaire CEO Elon Musk focuses on cost-reduction initiatives as sales growth significantly slowed down at Tesla. The report follows layoff announcements by several companies, including Snap, the owner of Snapchat, Macy's, and Estée Lauder Companies.
Decreasing Sales Growth
The report follows Elon Musk's caution that sales growth will decrease this year despite price reductions that have already impacted margins at Tesla, the world's most valuable automaker, and raised concerns among investors about weak demand and competition from China.
Tesla has responded by lowering the prices of its vehicles multiple times to stimulate sales. This move was announced along with its Q4 earnings report, aligning with Elon Musk's focus on cutting costs more heavily following the pandemic period's hiring surge.
BYD Outpacing Tesla as the World's Top EV Maker
Tesla's stock dropped about 21% in the past month due to the company not meeting its 50% annual sales growth target. Vehicle deliveries increased by 38% in 2023, but analysts anticipate a 20% increase this year.
Tesla is facing tough competition from international manufacturers who are offering cheaper electric vehicles. Data suggests that automaker BYD will likely surpass Tesla as the global leader in electric vehicle production this year. Demand for eco-friendly vehicles is declining overall, with dealers reporting an increase in unsold vehicles sitting in parking lots.
Multiple car manufacturers have announced significant reductions in investments for electric vehicle projects due to lower-than-anticipated demand. Last month, Ford revealed it would reduce production of its F-150 Lightning electric truck, impacting approximately 1,400 employees. This follows Tesla's rapid expansion, with its workforce nearly doubling between 2020 and now. By the end of last year, Tesla employed over 140,000 people worldwide, which means the company now has about eight times as many employees as it did in 2016, just before the Model 3 Sedan launch.
Consumers Opting for More Affordable Models
Tesla set a new record in the fourth quarter by delivering a high number of electric vehicles, surpassing market expectations and meeting its 2023 goal. However, China's BYD has been the leading electric vehicle maker by sales.
Tesla delivered 484,507 electric vehicles from October to December, which was less than the 526,409 vehicles delivered by BYD, indicating that consumers may have been opting for more affordable models in an economy with high-interest rates.
