Shares fell more than 5% on news that U.S. electric vehicle maker Tesla is making large-scale staffing cuts to cut costs amid the downturn in the electric vehicle market.
“We have taken a close look at the organization and made the difficult decision to cut more than 10% of our workforce globally,” Tesla CEO Elon Musk said in an email to employees.
“As we prepare for the next phase of growth, it is very important to look at all aspects of the company to reduce costs and increase productivity,” Musk explained.
He stressed that “there is nothing I hate more than this, but it is something that must be done.”
Tesla had 140,473 employees as of the end of last year, nearly doubling from three years ago.
Based on this, the U.S. media predicted that the number of people who will be fired this time will be around 14,000.
Tesla’s workforce reduction is attributed to its recent sluggish sales performance.
Tesla earlier this month reported first-quarter deliveries of 386,810 units, well below Wall Street expectations.
Tesla shares have fallen sharply since news of a large workforce cut came out.
It is a matter of thinking about whether only workforce reduction will benefit the company in the midst of a market downturn. There may be savings in labor costs, but there will be problems that will lead to many people losing their jobs.
EJ SONG
US ASIA JOURNAL