On April 15th, according to Phoenix Technology's report, Elon Musk just sent out an email to all employees, announcing a 10% global workforce reduction at Tesla.
Musk later stated, "Over the years, we have grown rapidly, establishing multiple factories worldwide. With this rapid growth, there have been redundancies in certain areas of roles and job functions. As we prepare for the next phase of company growth, focusing on all aspects of the company to reduce costs and increase productivity is extremely important."
Data shows that by the end of 2023, Tesla's global workforce numbered 140,000. This round of layoffs will affect approximately 14,000 people. This number is smaller than the previously anticipated layoff percentage by the market. Earlier in the day, some media outlets cited insiders saying that the layoffs could reach as high as 20%.
As of press time, Tesla's stock price was $171.05 per share, with a market valuation of $544.7 billion. Tesla's stock price has fallen by about 31% since the beginning of this year.
Sudden Layoffs of 14,000
This is not Tesla's first round of layoffs.
As early as 2022, due to pessimistic economic outlook, Tesla decided to cut about 10% of its workforce. This decision was also outlined by Musk in an email to executives. Meanwhile, Musk also suspended global hiring activities and increased the strategy of hiring hourly workers, which seemed to be a mitigating measure for the layoffs.
Recently, according to Business Insider, Tesla has adjusted the working hours at its Austin Gigafactory production line, reducing the previous 12-hour two-shift system to 11 hours for day shift and 10.5 hours for night shift.
This factory is responsible not only for producing the highly anticipated Cybertruck and Model Y but also serves as the research and development base for Tesla's next-generation vehicles.
Meanwhile, at other factories in Sparks, Nevada, and Fremont, California, it seems that workers have not been affected by the new work schedule and are still maintaining a 12-hour shift rotation.
This indicates that Tesla's strategies for different factories may vary, perhaps based on local production demands and economic efficiency.
In fact, rumors of Tesla layoffs began to spread as early as February. In February of this year, Tesla postponed performance evaluations for some employees, which prompted speculation from the outside world about Tesla initiating a new round of layoffs. Subsequently, media outlets followed up on this news.
At that time, Tesla required all management to evaluate the "criticality" of their team members, implementing a "binary assessment" system to directly assess the importance of each employee's position.
This practice was clearly aimed at identifying the most critical talents for the company while implying a potential threat of layoffs to other employees. Furthermore, Tesla even canceled semi-annual performance evaluations for some employees, indicating preparations for a new round of layoffs.
Tesla's quarterly report became the last straw that broke the camel's back, accelerating the pace of its layoffs. In the first quarter of this year, Tesla delivered a total of 386,800 vehicles worldwide, a year-on-year decrease of 8.5% and a quarter-on-quarter decrease of 20.2%, far below analysts' previous expectations of 449,000 vehicles.
This data not only shows a decline in Tesla's deliveries but also marks the first quarterly year-on-year decline since 2020.
This has exacerbated market concerns about Tesla's future performance. On April 9th, Robert W. Baird analyst Ben Kallo warned in a research report that Tesla's global deliveries in the second quarter may once again decline year-on-year, with global deliveries expected to be 444,500 vehicles, a decrease of 4.6% year-on-year.
In addition to its own issues, the global slowdown in electric vehicle sales is also forcing Tesla to make changes. Morgan Stanley analyst Adam Jonas pointed out in a recent report, "The momentum of global electric vehicle development is weakening, and the market supply has surpassed demand."
Innovation Without Breakthroughs, Returning to Earth
Tesla's goal has always been to accelerate the world's transition to sustainable energy. By 2030, Tesla aims to sell 20 million electric vehicles annually.
However, in 2024, Tesla's pace may slow down. During the earnings conference, Tesla warned that growth in 2024 is likely to be lower than last year, but did not provide specific targets. In 2023, Tesla's global vehicle deliveries increased by 38% year-on-year; for several years, Tesla's delivery target has been an average annual growth of 50%.
Tesla explained this as being "between two major growth waves. We are focusing on ensuring the next growth wave is well executed, driven by next-generation vehicles, energy storage, full self-driving, and other projects."
For a long time, what has supported Tesla's valuation has been its sales momentum and Musk's commitment to transforming the company into a leader in robotics and AI.
Musk once said, "Tesla is an AI/robotics company, even though it appears to many as a car company."
So, in the previous earnings conference call, Musk spent a long time talking about progress in artificial intelligence and robotics.
Among them, regarding full self-driving (FSD), currently only employees and a few customers are using it, but Tesla will push it to all US customers who have purchased FSD in the next few weeks. This is the first time that artificial intelligence is not only used for object perception but also for path planning and vehicle control. In the realm of humanoid robots, Musk has indicated the possibility of producing a certain number of Optimus models by 2025. However, this is a brand-new product with many uncertainties, and they will provide public updates on progress every few months.
Regarding chip advancements, Tesla is now progressing on two fronts: with Nvidia and Dojo. Based on current progress, Dojo holds great promise, but its development is relatively slow.
Overall, Tesla is undergoing a crucial yet awkward period: it needs to find a balance between innovation, technological edge, strategic leadership, and scale profits.
On one hand, Musk deeply understands the importance of innovation in maintaining absolute superiority, as his character emphasizes an innovative spirit. Grounded in first principles thinking, he drives exploration across multiple technological fronts, such as large models, humanoid robots, autonomous driving chips, and more, seemingly conquering the "heavens."
On the other hand, these innovations require significant investment and considerable time to deliver sufficiently leading results. For instance, areas like humanoid robots and large models still require substantial investment and time to produce innovative, commercially viable products.
Meanwhile, Tesla's past advantages in technology and products are diminishing, and its scale advantage is also being caught up, making it difficult for the market valuation system to avoid returning from the "heavens" to earthly realms.
Musk is someone who thrives in displaying remarkable achievements and power in "non-consensus" states. In environments lacking technological differentials, such as highly regulated and consensus-driven sectors, his brilliance fades.
Despite facing an unavoidable awkward period, Musk still holds the "trump card" in his hands, maintaining Tesla's position as a "pioneer" in the automotive industry.
