Tesla cuts one in ten jobs amidst slump
Tesla CEO Elon Musk, in light of the slump in the electric vehicle market and weak sales worldwide, plans to cut more than one in every ten jobs at the company. It is extremely important to look at every aspect of the company in terms of costs and productivity, stated an internal email from the company head that was seen by the German Press Agency on Monday. After a thorough review, the company has decided to reduce the number of positions by more than ten percent. According to the company's information, Tesla employed 140,473 people at the end of last year. As a result, more than 14,000 jobs are now at risk. The US industry portal "Electrek" and the "Handelsblatt" had previously reported on the email from the multi-billionaire.
No details yet on the Berlin plant
Details on the planned job cuts were not made public. There were also no details on whether and how many positions at Tesla’s only European plant in Grünheide near Berlin could be affected by the cuts. On its website, the company still lists many open positions at its newest factory. More than 12,000 people are now employed at the Grünheide plant. According to "Handelsblatt," around 3,000 of the 12,500 employees in Grünheide are expected to be laid off.
Dirk Schulze, IG Metall district director for Berlin-Brandenburg-Saxony, said in response to inquiries: "So far, there are plenty of rumors and a statement of intent from headquarters that over 10 percent of the staff should be cut - globally. What this means for Grünheide, even the works council has no information on that yet."
On Monday, prominent top manager Drew Baglino also announced that he had decided to leave Tesla the day before. Baglino, who joined Tesla in 2006, recently played a key role as the person responsible for batteries and motors. Head of policy Rohan Patel is also leaving, reported financial news service Bloomberg.
Tesla is feeling the impact of intense price competition in the largest car market, China, and unexpectedly delivered fewer vehicles worldwide in the first quarter with almost 387,000 cars, compared to a year earlier. Before this, doubts about the growth rate in the electric car market had already increased after years of strong growth.
Americans are buying combustion and hybrid cars again
In the USA, car buyers increasingly opted for combustion engine and hybrid vehicles, while in China Tesla faces more competition from local manufacturers. In Europe, Tesla had to temporarily suspend production in Grünheide, near Berlin, due to supply shortages of components following the redirection of ships after attacks by Yemeni Houthi rebels in the Red Sea and an attack on the plant's power supply.
With the rapid growth of recent years, there have been duplications in some areas, according to Musk's email. The job cuts would allow the company to be lean, innovative, and poised for the next growth phase. "There's nothing I hate more, but it has to be done," wrote the star entrepreneur.
The Tesla share fell in pre-market US trading. The share has lost over 40 percent since a high of nearly 300 US dollars last summer. From the record levels of over 400 dollars in the fall of 2021, the stock is even further away. Nevertheless, with a market value of nearly 545 billion dollars (512 billion euros), the company is still the highest-valued car manufacturer in the world, ahead of Japan's Toyota with 61.5 trillion yen (375 billion euros). The German car manufacturers Volkswagen, BMW, Mercedes-Benz, and Porsche AG lag far behind with a market capitalization between 69 and 85 billion euros.
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