On Monday, insiders claimed that Tesla fired members of its service, software, and engineering departments in another wave of mass layoffs.
The move comes after the Texas-headquartered automaker sacked all 500 members of its electric vehicle (EV) charging team. It drew condemnation from Supercharger network users, especially from brands that adopted Tesla’s charging connector, like Ford and General Motors.
By the end of 2023, nearly every major EV carmaker in North America has modified its vehicles to maximize Supercharger compatibility. However, the disbandment of the charging department cast doubt on whether the array of over 50,000 charging stations can maintain quality.
Last month, Elon Musk announced that the company would cut its global workforce by over 10.00% to increase operational agility. Since then, Tesla has seen an exodus of top executives, including Rohan Patel, Rebecca Tinucci, Drew Baglino, and Daniel Ho.
According to market analysts, the automaker is downsizing its labor force to cope with declining deliveries amid softening EV demand. In addition, the Musk-led company struggled with competitors in Q1 amid a brutal price war in the US and China.
Investors received the cost-cutting measures positively, with Tesla closing Monday’s market session nearly 2.00% higher, continuing its two-day winning streak.
Mass Layoffs to Help Tesla Diversify Its Offerings
Tech experts said Tesla intends to use the mass layoffs to divert funding from its EV segment into other departments. They added that Elon Musk will likely reallocate the resources to its humanoid robot, Optimus, robotaxis, and autonomous driving software.
In April, the American automaker revealed that it expects the mass layoffs to reduce expenses by over $350.00 million in the second quarter. Furthermore, profits in Q1 marked a 55.00% year-over-year decrease, making it the company’s worst quarter since the pandemic.
Lastly, Musk pledged to launch a fully autonomous robotaxi in August of this year, along with a companion app that combines the best of Uber and Airbnb.
