Former Tesla board member Steve Westly joins ‘Varney & Co.’ to break down the automakers’ 1Q delivery report and its potential impact on the stock market.
Tesla confirmed its laying off more than 10% of its global workforce following weak first quarter deliveries and increasing competition in the electric vehicle (EV) market, according to a filing with the Securities and Exchange Commission.
“Over the years, we have grown rapidly with multiple factories scaling around the globe. With this rapid growth, there has been a duplication of roles and job functions in certain areas. We believe it is extremely important to look at every aspect of the Company for cost reductions and increasing productivity. This action will prepare Tesla for our next phase of growth, as we are developing some of the most revolutionary technologies in auto, energy and artificial intelligence”, the filing detailed.
This followed a leaked internal email from CEO Elon Musk saying that the automaker is looking to cut costs and increase productivity after years of rapid growth that have led to duplication in some roles and functions in certain areas of the company, tech publication Electrek reported on Monday.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 161.48 | -9.57 | -5.59% |
The world’s most valuable automaker employs about 140,473 workers worldwide, Reuters reported, citing Tesla’s latest annual report. The reported staffing reduction will affect about 15,000 employees.
Tesla did not immediately respond to FOX Business Digital’s request for comment.
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Elon Musk, CEO of Tesla, reportedly sent an internal email announcing the cuts to workers. (Reuters/Gonzalo Fuentes / Reuters Photos)
The lay-offs come after Electrek reported that Tesla had told managers to identify critical team members, paused some stock rewards, canceled some worker’s annual reviews and reduced production at Gigafactory Shanghai.
Earlier this month, it was reported that Tesla’s quarterly deliveries declined for the first time in nearly four years and fell short of Wall Street analysts’ estimates. Tesla announced at the time that it delivered roughly 387,000 vehicles in the first quarter – well below expectations of about 443,000 and an 8.5% decrease compared to the first quarter of last year.
The reported 10% cut to Tesla’s global workforce will affect about 15,000 workers. (Smith Collection/Gado/Getty Images / Getty Images)
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The automaker has also faced an escalating price war in China, a key market for the EV maker, as low-cost competitors like BYD forced it to reduce prices and cut into its margins.
Tesla announced that it delivered 386,810 vehicles worldwide from January through March, 8.5% below the 423,000 it sold in the same quarter of last year. (Photo by Joe Raedle/Getty Images / Getty Images)
Reuters also reported earlier this month that Tesla was abandoning its long-touted plans to produce a budget-friendly starter car, purportedly called Model 2, that was expected to start at $25,000.
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Musk at the time accused Reuters of “lying,” though the outlet responded that he didn’t identify any specific inaccuracies in its reporting.
Shares of Tesla has dropped over 30% this year.
