It is a harsh reaction to the recent weak sales figures: the US electric car manufacturer Tesla apparently wants to cut around one in ten jobs worldwide. This is reported by several media outlets such as the US tech publication Electrek and that Handelsblatt. You are referring to an internal email in which Tesla boss Elon Musk announced job cuts. It says, among other things: Tesla has made the “difficult decision” to “reduce its workforce worldwide by more than ten percent.” And further: “This will make us lean, innovative and hungry for the next phase of growth.” He hates the step, but it is necessary. The email was signed succinctly: “Thank you, Elon.” Tesla has not yet commented on the job cuts reports.
According to that Handelsblatt Around 3,000 of the 12,500 employees in Grünheide, Brandenburg, are also said to be affected by the savings plans. The first employees have already been informed that these are primarily temporary workers whose contracts will not be extended. The cuts are particularly surprising in Brandenburg, as Tesla actually wanted to almost double the workforce in Grünheide to more than 22,000, as the car manufacturer has big plans for a factory expansion there. Dirk Schulze, IG Metall district manager Berlin-Brandenburg-Saxony, said: “So far there are a lot of rumors and a declaration of intent from the company headquarters that over ten percent of the workforce is to be reduced – globally. What that means for Grünheide is something we have to say ourselves The works council has not yet provided any information.”
On Monday evening, Brandenburg’s Economics and Labor Minister Jörg Steinbach (SPD) also spoke up. In the event of a workforce reduction at the US car manufacturer Tesla’s car factory in Grünheide, he expects that far fewer than 3,000 jobs will be lost. “The slump in sales of electric cars in Germany and Europe is unlikely to leave a mark on a market leader like Tesla,” said Steinbach. He is in contact with the company. “If there were to be job cuts at Tesla in Grünheide, according to our information, the number of jobs would not be around 3,000, but would be significantly lower.”
This is not the first wave of job cuts that Elon Musk has prescribed for his company: Two years ago, Tesla laid off around ten percent of its employees, and thousands of people also had to leave the company in 2018 and 2019.
The share price has already fallen by 31 percent this year
The Tesla workforce has been fundamentally concerned about new job cuts for a long time. At the beginning of the year, Tesla managers were asked to assess whether their employees’ positions were critical. Some employees were told late last year that the company would no longer offer performance-based stock awards as part of annual performance reviews. “We just have to squeeze every penny we can,” Chief Financial Officer Vaibhav Taneja said when announcing the latest financial results. “We have a strong team that is fully focused on this task.”
On Monday, the first Tesla top managers spoke out and announced their departure, for example Drew Baglino. He had been at Tesla since 2006 and played a key role in the development of batteries and electric motors. He wrote on Platform X about his farewell only words of praise about the electric car manufacturer. Political boss Rohan Patel will also leave the company, like him also on Xpackaged in phrases of praise and gratitude, announced.
Tesla will not present its figures for the past quarter until next week. The electric car pioneer started the year with a significant decline in sales. Deliveries fell by more than eight percent in the first quarter compared to the previous year. Since the beginning of the year, the company has delivered 386,810 vehicles; experts had assumed 457,000 vehicles. Production also fell by around 1.7 percent. Nevertheless, Tesla has a surplus of almost 50,000 vehicles that could not be sold. It was the first time in almost four years that the company delivered fewer vehicles than a year ago. The Tesla share price has fallen by 31 percent this year. Nevertheless, with a market value of almost $545 billion, the company is still the world’s highest valued car company.
The company primarily blames supply chain problems for the poor start to the year, but Tesla cannot escape the general trend that demand for electric cars has declined in many markets, especially in Europe and the USA. In addition, the competition for the electric car pioneer from other manufacturers is increasing, especially from Chinese competitors. Tesla repeatedly lowered prices to boost sales. As a result, the profit margin suffered last year. Now cost savings through job cuts should help.