Tesla’s Worldwide Workforce Reduction: U.S. and China Markets Affected
Tesla’s global restructuring efforts encompass job cuts in its key markets, the United States and China, spanning various departments, including sales, technology, and engineering, according to five sources briefed on the matter.
CEO Elon Musk communicated the layoffs in an internal memo on Monday, seen by Reuters, attributing the decision to the company’s grappling with declining sales and heightened competition in the electric vehicle market.
In the United States, several service centers experienced significant layoffs, particularly affecting sales staff and technicians. Additionally, one location reportedly terminated all front-of-house personnel.
A Tesla program manager in California shared a LinkedIn spreadsheet listing over 140 laid-off employees, predominantly engineers, who are now seeking alternative employment opportunities.
Meanwhile, sources indicate that Tesla’s China sales team has begun receiving notifications of redundancy, with estimates suggesting that over 10% of the team members may lose their jobs. However, in Shanghai, home to Tesla’s largest manufacturing facility, layoffs are expected to be minimal, affecting only “several dozen” employees.
The announcement of job cuts took a toll on Tesla’s stock performance, with shares dropping 2.5% in premarket trading on Tuesday following a 5.6% decline on Monday.
Both Tesla’s U.S. headquarters and China unit refrained from immediate comment, and the sources opted for anonymity due to confidentiality constraints.
Efforts to obtain official statements from local Chinese authorities were unsuccessful, and Tesla Germany refuted reports of mass layoffs, clarifying that no employees had been notified yet. The company emphasized its commitment to adhering to labor laws and consulting with the works council before implementing workforce changes.
However, Germthe, a union I.G. Metall, criticized Tesla for failing to engage with the works council, as is customary in Germany, before announcing the job cuts. Despite Germany’s stringent labor laws governing staff terminations, approximately 1,000 workers at the Gigafactory Berlin-Brandenburg are employed on temporary contracts, rendering them more susceptible to dismissal.
Tesla’s challenges extend beyond its workforce restructuring. There is intensifying competition in China and sluggish sales in the United States amid a fiercely competitive pricing environment. Despite efforts to stimulate demand through price reductions, global vehicle deliveries experienced their first decline in nearly four years in the first quarter, reflecting the mounting pressures facing electric car manufacturers.
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