On Monday, Tesla Inc.’s shares tumbled on reports that Elon Musk announced a new round of layoffs through an internal memo.
The Austin-based automaker’s stock edged 5.59% lower to $161.48 per share on April 15, followed by a 0.76% after-hours dip. Moreover, industry watchers project a 1.22% decline to $159.51 apiece in the coming market session.
According to the memo, Tesla will cut over 10.00% of its global workforce, which stood at 140,473 as of December 2023. The notice elaborated that the move intends to reduce costs and increase productivity by eliminating redundant positions across all levels.
However, financial experts claimed that the true motive of the layoffs is to minimize the losses caused by the recent price cuts. The intensifying competition in the electric vehicle (EV) industry has triggered a price war as brands vie for market share.
In the fourth quarter of 2023, BYD dominated the Chinese market after implementing aggressive price cuts targeting popular Tesla models. In late March, Xiaomi released its first EV, the Speed Ultra 7, with CEO Lei Jun admitting it will sell at a loss to attract consumers.
Thus, the EV manufacturer was forced to lower the prices of its Model 3 and Model Y to remain competitive. Unfortunately, the considerable depreciation made prospective buyers consider Tesla models a lousy investment.
Elon Musk Loses Two Top Tesla Executives
In another major blow to Tesla, Drew Baglino and Rohan Patel, two long-time helpers of Elon Musk, announced their departure from the company. According to the automaker’s investor relations website, Baglino was part of its four-member leadership team, which included Musk.
Baglino has led the automaker’s firmware and electrical engineering team since 2006. Meanwhile, Patel, a former senior advisor to President Obama, has assisted Tesla in meeting climate and other policy requirements since 2016.
2024 has been a miserable year for the Elon Musk-owned company so far, with a loss of 35.01% in value year-to-date. Analysts predict Tesla’s stock price will continue deteriorating unless it takes action to restore investor confidence in its April 23 annual meeting.
