Tesla, the popular electric vehicle manufacturer, has announced plans to lay off more than 10% of its global workforce in preparation for its next phase of growth. CEO Elon Musk revealed the decision in a memo to employees, citing the need for cost reductions and increased productivity.
This news caused Tesla shares to fall 3% on Monday morning. The company currently has 140,473 employees worldwide, as of December 2023. Tesla has been facing challenges in recent months, including a 31% drop in shares year-to-date and increased competition in the electric vehicle market.
Chinese companies like BYD and Xiaomi have presented a threat to Tesla’s dominance in the market. Musk’s controversial statements have also led some potential customers to opt for other brands over Tesla. The company recently reported its first annual decline in vehicle deliveries since 2020.
Despite previous promises to raise fees as features were added, Tesla has actually reduced the subscription price for its Full Self-Driving option. The company’s operating margin dropped to 8.2% in the fourth quarter, down from 16% the previous year.
Tesla has warned investors that vehicle volume growth this year may be lower than in 2023. Various logistical challenges, such as supply chain disruptions and factory suspensions, have also impacted the company’s operations.
The company is set to release its first-quarter financial results on April 23. Musk expressed gratitude to departing employees for their contributions and emphasized the importance of innovation and growth for those remaining at Tesla.
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