Elon Musk, founder, CEO, and chief engineer of SpaceX, CEO of Tesla, CTO and chairman of Twitter, Co-founder of Neuralink and OpenAI, at VIVA Technology (Vivatech)

Turmoil At Tesla, Layoffs Could Be Imminent

According to a report from Motor Trend, Tesla’s Model Y may have been the best-selling vehicle of 2023, but many jobs at the company may now be on the chopping block. Tesla’s stock plummeted 12 percent recently after their fourth-quarter earnings report showed that the automaker missed their production estimates and pointed towards a gloomy outlook for their 2024 production numbers.

The Brewing Uncertainty at Tesla

A year of price cutting and stagnating electric vehicle (EV) adoption rates have taken their toll on the automaker. Even though Tesla and other EV makers like Chinese company BYD saw sales growth last year, Tesla’s growth was only 3 percent. BYD’s electrified vehicles also outsold Tesla’s during the fourth quarter of 2023. While you can argue last year was an overall success for Tesla due to the Model Y’s historical sales numbers – the company’s lackluster fourth-quarter numbers set the stage for a potential shake-up.

New Job Criteria

According to Motor Trend’s report, Tesla has requested that managers use binary criteria to assess if their employee’s jobs are “critical” for Tesla. Given how the company has recently hired more workers, but its sales numbers are slowing down due to a lack of EV demand from consumers, and Tesla will keep its prices low, layoffs will likely happen. It’s worth noting that Musk does not joke around about cutting jobs. Since taking the reins at X (the social media platform formally known as Twitter), he has laid off between 80 and 90 percent of the staff.

Other Tesla Drama

There’s also the recent legal drama over a Delaware court rescinding CEO Elon Musk’s historic $55 billion pay package after it ruled that Musk misled the company’s shareholders to secure his hefty compensation deal. Chancellor Kathaleen ST. J. McCormick of the Delaware Court of Chancery cited that Musk’s “superstar” status interferes with the board’s oversight, getting in the way of them fulfilling their legal obligation to serve the shareholder’s best interests.

She also found Musk’s $55 billion compensation package excessive beyond what was sufficient to motivate him to do a good job. Musk responded to Chancellor McCormick’s verdict by threatening to reincorporate Tesla in Texas. It’s a move Tesla’s shareholders could stymie if they perceive it as a ploy by Musk to diminish their control in the company.

Also detrimental to Tesla was the recent news that rental car company Hertz slashed around 20,000 EVs from their fleet. Approximately 80 percent of them were Teslas. The automaker’s EVs are notorious for their high repair costs and are challenging for drivers unfamiliar with Tesla’s complex touchscreen interface or charging procedures. Hence, Hertz booted them from their rental car lineup. 

Author: Jarret Hendrickson

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