In what is being described as a shakeup, global EV auto maker Tesla has announced a ten percent global operational workforce reduction along with the departure of two other senior executives.

This move is being viewed as a further barometer of an existing tepid plug-in electric-vehicle market global demand environment. Tesla also has its own unique business challenges that includes an aging vehicle line-up and a months long strategy of aggressively cutting vehicle prices to spur demand, which as in- turn impacted vehicle margins.

Reportedly, the company has in excess of 140,000 total employees at the end of 2023.

Tesla CEO Elon Musk announced the cutback in company-wide communication to employees. He pointed to job cuts as necessary to reduce costs and increased productivity. Tesla’s last significant headcount reduction occurred in 2022 but at the time, was focused on salaried positions.

According to reporting by Bloomberg, company staff were fearing potential job cuts since early this year, when managers were asked to affirm whether each of their employees’ positions is critical. Some salaried employees also were told late last year that the company wasn’t going to be offering merit-based equity awards as part of annual performance reviews.

This move follows Tesla’s report of Q1-2024 production and vehicle deliveries which represented the first year-over-year decline in vehicle deliveries since 2020.

Added Senior Executive Departures

After the report on headcount reductions, two senior executives announced that they were departing from the EV maker.

They include 18 year veteran Drew Baglino, the head of powertrain and energy engineering and Rohan Patel, the head of policy and business development. According to reporting by The Wall Street Journal, Baglio frequently accompanied Musk on investor financial performance briefings and “had been a stabilizing force in a company known for high executive churn.”

In August of last year, CFO Zach Kirkhorn, and Powertrain Engineering Vice President Colin Campbell announced their departures from the company.

Vehicle Strategy

Various reports related to today’s development indicated that Musk has further told employees to focus on both a robotaxi and the development of a mass market appeal EV vehicle as key priorities for the coming year.

 

As indicated in our last commentary related to Tesla, the company’s formal reporting of Q1-2024 financial performance is scheduled for April 23. The Wall Street investment community and supply chain stakeholders will especially have a keen eye for financial performance specifics, the specific geographic areas with the bulk of cutbacks, and for more definitive business and vehicle development strategies.

 

 

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