Tesla Slashes Workforce Amid Continued Slowdown in EV Sales
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Internal documents reviewed by CNBC show that Tesla has slashed its workforce by at least 14% in 2024 as the electric vehicle (EV) giant grapples with tepid deliveries and falling profit margins.
Regulatory filings showed that Tesla had 140,473 employees at the end of 2023. However, it now has just around 121,000 employees which includes both permanent and temporary workers. Notably, this might not be the precise number and is based on the “everybody” email distribution list as of June 17.
“Over the next few weeks, Tesla will be doing a comprehensive review to provide stock options grants for exceptional performance,” said CEO Elon Musk in that email.
Tesla Announced Layoffs During Q1 Earnings Call
To be sure, reports of Tesla slashing its workforce are not coming out of the blues. During the company’s Q1 2024 earnings call in April, CFO Vaibhav Taneja said “As we prepare the company for the next phase of growth, we had to make the hard but necessary decision to reduce our head count by over 10%.”
Musk also commented on the drive for efficiencies and said, “We’ve had a long period of prosperity from 2019 to now. And so, if a company sort of organizationally is 5% wrong per year, that accumulates to of inefficiency.”
Meanwhile, a Tesla employee that CNBC spoke with said that some factory workers fear that the company will announce more layoffs when it releases its Q2 earnings next month.
Tesla Reported a YoY Decline in Q1 Deliveries
In Q1, Tesla’s revenues came in at $21.30 billion which was well short of the $22.15 billion that analysts expected. The 9% annual fall in Tesla’s revenues is the steepest pace of decline since 2012. However, the fall in revenues shouldn’t have come as a surprise as Tesla’s deliveries plummeted 8% in the quarter, the first YoY decline since 2020.
Tesla also missed bottomline estimates and its EPS of 45 cents fell short of the 51 cents that analysts were expecting.
In its shareholder deck, Tesla reiterated that the “volume growth rate may be notably lower than the growth rate achieved in 2023. In response to an analyst question on whether its sales growth could be negative in 2024, Musk responded by saying No, I think we’ll have higher sales this year than last year.”
TSLA to Unveil Robotaxi on August 8
Notably, while Tesla has missed several self-imposed deadlines for full autonomy, Musk was quite categorical that it’s an aim that Tesla continues to strive for. “If somebody doesn’t believe Tesla’s going to solve autonomy, I think they should not be an investor in the company,” said Musk.
Musk has previously said that Tesla’s valuation would depend on how it progresses toward autonomy. While the stock has lost over half of its market cap, Tesla still remains the world’s most valuable automaker by some distance.
Tesla Employee Shares Robotaxi Video
Tesla is set to unveil its robotaxi on August 8. In a LinkedIn video, a user named Rosalie Nathans, whose profile lists her as a senior manager for used cars and online sales at Tesla, shared a video of the robotaxi, with the clip titled “coming soon.”
While a section of the market is apprehensive about the robotaxi, those bullish on Tesla believe it would be a key driver for the stock. For instance, Wedbush said, “We believe the August 8th robotaxi day will be a key historical moment for the Tesla story that we see as a near-term catalyst.”
Musk to Unveil Master Plan 4
Tesla is also set to unveil its Master Plan 4 which Musk has said would be “epic.” According to Wedbush analyst Dan Ives, “We believe the next chapter in the Tesla growth story around autonomous and [Full-Self-Driving] is now on the near-term horizon, set to take Tesla’s valuation to north of $1 trillion in 2025.”
Morgan Stanley analyst Adam Jonas who is among the biggest Tesla bulls believes that the announcements would go beyond the company’s EV business. “Ok, Tesla will still make cars, but we think investors should prepare for something else. We expect MP4 to be underpinned by Tesla’s commercial ambitions in AI, robotics, hybrid compute (including distributed thermal and compute in the car) that spans from cloud to edge,” said Jonas in a note.
Musk Says Tesla Is Much More Than an Automotive Company
During the Q1 earnings call, Tesla emphasized that it’s much more than a car company and should be seen as an AI or robotics company.
Musk is particularly bullish on Tesla’s Optimus humanoid and said, it “will be more valuable than everything else combined.” He added, “We do think we will have Optimus in limited production in the natural factory itself, doing useful tasks before the end of this year. And then I think we may be able to sell it externally by the end of next year.” Musk however termed these timelines as “guesses.”
Meanwhile, even as Tesla touts its software capabilities, the company’s EV business – which accounts for much of its revenues and profits – continues to reel under the impact of the industrywide slowdown as reports of mass layoffs suggest.
