Extensive job cuts at Tesla
Tesla has reduced its global workforce by more than 14 percent since the beginning of 2024. This measure follows an announcement by CEO Elon Musk in April 2024, which originally envisaged a reduction of 10 percent. However, new reports indicate that the actual number of redundancies exceeds the original estimates. According to CNBC, only around 121,000 people were still employed worldwide in mid-June 2024, a significant decrease from the 140,473 employees at the end of 2023.
Reasons for the job cuts
The job cuts are taking place at a time when Tesla is struggling with several challenges. These include a decline in sales, an outdated product line and increased competition, particularly from Chinese competitors such as BYD and Geely. Tesla recorded a 9 percent year-on-year decline in sales in the first quarter of 2024, the largest decline since 2012. These difficulties are reflected in a general slowdown in growth in the electric vehicle market.
Impact on the workforce and production
The layoffs also affect Tesla's Gigafactory in Brandenburg, Germany. Up to 12,500 employees worked at the company's only European production facility. If a reduction of 14 percent has also taken place here, around 1,750 workers would be affected. The reduction in the workforce has not only led to unrest within the company, but also to structural changes. For example, the entire supercharging team was dissolved, only for some employees to be rehired later.
Future prospects and market reactions
During the Q1 2024 results conference call, Elon Musk hinted that further far-reaching changes may be necessary to eliminate inefficient structures. He spoke of an inefficiency of 25 to 30 percent and emphasized the need for restructuring. The results for the second quarter are expected at the beginning of July 2024 and could have a further impact on the workforce.
Despite the wave of layoffs and the associated challenges, Elon Musk remains optimistic and continues to promise progress and innovation. The market reacted cautiously to these developments. Although the share price of Tesla has fallen by 27 percent since the beginning of the year, it has remained relatively stable in the short term. This contrasts with the Nasdaq, which has risen by 18% in the same period.
International competitive conditions
Increasing pressure from Chinese manufacturers and the trade disputes between the USA and China are exacerbating the situation. The USA has increased the punitive tariffs on Chinese electric cars from 25% to 100% in order to protect the domestic industry. The EU is also planning similar measures with tariffs of up to 38.1%. These trade barriers could further increase competition and Tesla put additional pressure on competition.
Conclusion
Tesla is facing major challenges that require far-reaching changes. The extensive job cuts and competition from China are putting the company to the test. Nevertheless Tesla remains a key player in the electric car market under the leadership of Elon Musk and is continuously working to strengthen its position through innovation and structural adjustments.
