Tesla is cutting 10 percent of its workforce after falling sales

Tesla is cutting 10 percent of its workforce after falling sales

Car maker Tesla will lay off one in ten workers. This emerged on Monday from an internal email from CEO Elon Musk, which was seen by international media such as The Wall Street Journal and Reuters. Tesla, which had 140,000 employees by the end of 2023, has been struggling with disappointing sales figures for some time.

In January it emerged that Tesla had been overtaken by China’s BYD as the global market leader in electric vehicle sales. The automaker sold more cars than Tesla did by the end of 2023.

At the beginning of April there was more bad news. First-quarter sales figures showed that Tesla sold 386,810 vehicles in the first three months of 2024, while analysts had previously expected around 450,000 units.

The company attributed the decline to, among other things, long-term problems with the Model 3 car and production problems due to the burning of the Tesla factory near Berlin. This factory was closed for several days due to the fire. Next Tuesday, Tesla will publish figures for the first quarter of 2024.

“As we prepare the company for our next phase of growth, it is important to look at reducing costs and increasing productivity,” Musk wrote in his email. Before the US stock market opened, prices were down about 1.5 percent around 2 p.m. Monday. In 2024, Tesla shares are already down 30 percent, making it one of the worst-performing stocks in the S&P 500 index.

International affairs

Tesla’s problems are not entirely isolated. Sales of electric vehicles have fallen sharply worldwide in recent months. Many car manufacturers are cutting back on investment. In China, Chinese-made electric cars are becoming increasingly popular, which also causes Volkswagen a headache. Tesla’s market share in the electric market in China fell from 7.7 percent to 6.6 percent in the first two months of 2024.

Many analysts are wondering when Tesla will release the long-awaited affordable model that will allow it to compete with BYD’s affordable cars. Tesla itself drastically reduced the prices of various cars last year, leading to a price war in the electric car market.