Under the leadership of billionaire Elon Musk, Tesla revealed its decision to cut more than 6,000 jobs at its facilities in Texas and California. This move comes as the company faces challenges from declining demand and competition from more affordable Chinese imports, leading to a 43% decrease in its stock price over 2024.
Earlier this year, Tesla had already announced a 10% reduction in its global workforce. The first-quarter figures for 2024 showed revenues of $21.3 billion, slightly below analysts' expectations of just over $22 billion.
Despite the challenging circumstances, the announcement to expedite the launch of new models, originally scheduled for the second half of 2025, caused Tesla's shares to rise by nearly 12.5% in after-hours trading. However, specific details about the pricing of these new vehicles were not disclosed.
Elon Musk is set to address investors in a conference call, likely revealing more information about the upcoming models, including the rumored Model 2 (a lower-priced Tesla vehicle reportedly put on hold in April).
To counter falling sales, Tesla has been actively lowering its prices in various markets to attract new customers. The company acknowledged that the global electric vehicle market is under pressure, with many automakers prioritizing hybrids over EVs.
Competition from Chinese models has intensified, offering similar reliability at a lower price point, further impacting Tesla's market position. As a result, Tesla's share price has seen a decline of approximately 40% since the beginning of the year.
However, Tesla has weathered similar stock price challenges in the past, having seen its stock fall to $113 in January 2023 before rebounding. Despite plans to introduce new models earlier than anticipated, the company is proceeding with its workforce reduction.
Tesla announced it will cut 3,332 jobs in California and 2,688 positions in Texas, starting in mid-June. These reductions represent 12% of Tesla's workforce in the area, where its gigafactory and headquarters are located. An additional 285 jobs will be lost in New York.
Elon Musk, however, attempted to downplay the impact of these job cuts, highlighting the company's creation of over 30,000 manufacturing jobs in California in a social media post on Tuesday.
Tesla's total workforce stood at more than 140,000 as of late last year, a significant increase from around 100,000 at the end of 2021, according to the company's filings with US regulators.
Aside from these operational challenges, Tesla is also facing a battle over Elon Musk's compensation package. The company recently asked shareholders to vote on accepting Musk's compensation package, originally valued at $56 billion, which had been rejected by a Delaware judge.
The judge ruled that Tesla's directors had breached their fiduciary duty to the company by awarding Musk the payout. Due to the decline in Tesla's stock value, the compensation package is now estimated to be around $10 billion less, though it remains a substantial figure, greater than the GDP of many countries.
Additionally, Tesla is seeking approval from its shareholders to relocate the company from Delaware to Texas, a move Elon Musk advocated for after the judge rejected his compensation package.
.jpg)
0 Comments