It doesn’t seem like electric vehicles are the play to make this year, as a certain famous brand has announced a huge round of layoffs across the company amid an internal war between investors and the CEO. Let’s take a look.
Charged Up and Ready to Roll
There are many things that electric vehicles are good for, chiefly saving the planet. But they’re also a good money maker – or at least they used to be.
The Road Less Traveled
Now, however, with reports coming out of the country’s biggest manufacturer, Tesla, about a new round of layoffs, it seems as though the optimistic bubble may have burst.
Stock Shock
If the stock prices are anything to go by, Tesla isn’t performing as it would like to. Despite the stock seeing a huge boom in 2021, its performance has been on a downward turn.
A Roller Coaster Ride on Wall Street
The last few months have been particularly bad, with the stock currently trading 30 percent lower than it did at the end of 2023.
Inflation Frustration
As with many companies at the moment, Tesla is really feeling pressure from inflation. Falling sales, a lack of demand, and an increase in electric vehicle competition, as well as increased costs of labor and parts, have caused first quarter revenues to drop 9% and profits to fall to $1.1 billion – down 55% on last year’s first quarter.
CEO Strife
Some people have also pointed the blame at Tesla’s CEO Elon Musk. There are many controversies surrounding Musk, and with those, a lot of expert complaints about “the cult of personality,” which is seen as off-putting for many prospective Tesla buyers.
Tough Decisions
Regardless of the reasons why, as many companies do, Tesla has opted to go for layoffs. In mid-April 2024, Elon Musk sent out a memo to all employees announcing a sweeping round of layoffs would be coming for 10% of the company within the next year – approximately 14,000 jobs – and he’s sticking to his word.
Tesla’s Workforce Reduction
Initial WARN notices filed with Texas and California showed Tesla eliminating 3,332 jobs in California and 2,688 in Texas – 6200 jobs in total.
Statewide Shake-Up
But last month Musk announced they would lay off just under 700 staff members in Nevada in an effort to reduce costs.
Division Dissolution
It then came out that Musk had shut down the division overseeing Tesla’s supercharger business, laying off a team of 500 and removing two senior executives.
Manufacturing Meltdown
That was more recently followed by more than 600 new layoffs last week in Fremont and Palo Alto, California, at Tesla’s manufacturing and engineering offices.
Global Cutbacks
Tesla also plans to eliminate approximately 400 jobs in Germany and 285 positions in Buffalo, New York, beginning on July 15.
Musk Pushes for Further Reductions
However, days after Musk’s email circulated, reporters at Bloomberg found that Musk was actually pushing for a 20% reduction in the workforce, as its quarterly vehicle deliveries had fallen by that same amount.
Quarterly Quandary
This was a figure also being talked about by Tesla employees, when interviewed by reporters at Electrek – and could potentially affect tens of thousands of people.
Lean, Mean, and Innovative
Musk, for his part, has claimed, “There is nothing I hate more, but it must be done. This will enable us to be lean, innovative, and hungry for the next growth phase cycle.”
Shareholder Showdown
But that’s not where Tesla’s issues end – a group of Tesla shareholders are rebelling.
Vote of No Confidence
They’ve asked other shareholders to vote down a 2018 payment package for Musk himself worth $56 billion and to vote against the re-election of two board of director members – Kimbal Musk (Elon Musk’s brother) and James Murdoch (a close friend of Musk.)
Tesla’s Pay Package Plight
The pay package was struck down in January of this year by a judge who claimed that Musk had too many ties with Tesla board members and argued that Tesla directors weren’t acting in the best interests of investors.
Debating Tesla’s CEO Compensation
The board, however, put the package back up for re-approval next month. In a letter, the rebel shareholders argued that the pay package would not contribute to Tesla’s long-term growth and stability and criticized “Musk’s role as effectively being a part-time CEO,” pointing to his increased time spent on other business ventures.
A Question of Leadership
“Shareholders should not pretend that this award has any kind of incentivizing effect – it does not. What it does have is an excessiveness problem, which has been glaringly apparent from the start,” the group wrote. They added, “There is ample evidence that the Board is overly beholden to CEO Musk.”
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The post Crisis at Tesla As Layoffs and Investor Angst Surge first appeared on Liberty & Wealth.
Featured Image Credit: Shutterstock / Frederic Legrand – COMEO.
The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
For transparency, this content was partly developed with AI assistance and carefully curated by an experienced editor to be informative and ensure accuracy.
