April 15, Tesla (TSLA.O) is in the process of laying off more than 10 percent of its workforce globally, according to inside sources, as the company grapples with slumping sales and an intensifying price war for electric vehicles (EVs).
"Every approximately five years, we need to restructure and optimize the company for the next phase of growth." CEO Elon Musk said in a comment on a social media platform. Meanwhile, the successive departures of two members of senior leadership have worried some investors.
In an internal memo, Musk announced the decision to conduct a global layoff of more than 10% in order to drive the company's next phase of growth by embarking on a comprehensive cost-cutting and efficiency drive. The layoffs come amid media reports that Tesla is ending development of a high-profile $25,000 low-cost car that was seen as a pillar of its mass-market expansion. Musk dismissed the report as inaccurate but didn't elaborate on what went wrong, and hasn't spoken out on the issue since, raising uncertainty about his strategic interpretation. Sources said on Monday that the project had been divested of its funding and that related staff had been laid off.
Tesla is now shifting its focus to self-driving robot cabs based on the same small vehicle platform, but experts say that could be years away from releasing a fully self-driving vehicle with regulatory approval.
Tesla shares closed down 5.6 percent at $161.48 on Monday, evaporating about $30 billion in market value. Tesla shares are down about 33 percent so far this year, underperforming traditional automakers like Toyota (7203.T) and General Motors (GM.N), whose shares have risen 45 percent and about 20 percent, respectively.
Tesla reported that global vehicle deliveries fell for the first time in four years in the first quarter, as price cuts failed to boost demand. Its gross profit margin fell to 17.6% in the fourth quarter of last year, a more than four-year low. The high interest rates have dampened consumers' willingness to buy cars, and the pressure is mounting in the face of a one-time overtake by China's strongest rival BYD (002594.SZ) and a low-pricing offensive by newcomer Xiaomi (1810.HK) and others. Tesla is gearing up to start sales in India, the world's third-largest auto market, this year, with plans to build cars in Germany for export to the country.
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