tesla Shares fell more than 1% in pre-market trading on Monday following media reports that the company would lay off more than 10% of its global workforce.
The company’s shares were down 1.32% in premarket trading around 8:20 a.m. ET.
“As we prepare the company for its next phase of growth, it is critical that we look at all aspects of the company to reduce costs and improve productivity,” said Tesla CEO Elon Musk. “, he said in an internal document. Memo cited by ReutersWhich Technical publications Electrek It was mentioned in the first report on layoffs.
“As part of this effort, we have overhauled our organization and made the difficult decision to reduce our workforce by more than 10% worldwide,” the memo said.
CNBC has not been able to independently verify the memo and has reached out for comment.
Tesla has 140,473 employees as of December 2023.
Tesla shares have taken a hit in recent months, falling 31% since the start of the year due to weaker demand for electric vehicles and increased competition from Chinese automakers that benefit from government subsidies. One of those rivals, BYD, dethroned Tesla last year to become the world’s largest EV seller. Mr. Musk has previously acknowledged that China, home to Tesla’s large factories, could be the company’s strongest competitor.
“Many people think that the top 10 car companies will be Tesla, followed by nine Chinese car companies. I don’t think they’re wrong,” Musk said in November.
margin
As if to foreshadow layoffs, U.S. companies earlier this month reported lower annual vehicle deliveries for the first time since 2020, when the coronavirus pandemic disrupted production unrelated to demand, meaning first-quarter deliveries. reported a decrease. Production volume in the first quarter was 386,810 units, down 8.5% year-on-year, with production volume down 1.7% year-over-year and 12.5% quarter-on-quarter.
Deliveries serve as an approximation of Tesla’s revenue, but are not precisely defined in the company’s shareholder communications.
Since then, the company has also resorted to lowering the subscription price of its premium driver assistance system, the Full Self-Driving package, for U.S. customers, but Musk’s previous promise that this would only result in higher FSD fees This is a movement that is in stark contrast to that. It will increase as Tesla enhances the features and functionality of the system.
However, the company’s operating margins remain under pressure (8.2% in the fourth quarter, down from 16% last year), and Tesla has warned investors that it expects car sales to grow this year. I’m warning you to be careful. “This is significantly lower than the rate recorded in 2023,” he said, noting that “we are currently between two major waves of growth.”
Logistical challenges compounded Tesla’s problems this year. The company’s parts supplies fell victim to disruptions caused by a maritime attack in the Red Sea by Yemen’s Houthis, while its huge factory near Berlin, Germany, was damaged by suspected arson at a nearby electrical substation. , was forced to temporarily halt production.
Tesla will report its first quarter financial results on Tuesday, April 23rd.