Tesla Laying Off 10% After a Disappointing Q1 and EV Market Slowdown

Electric vehicle leader Tesla announces layoffs exceeding 10% of its workforce following a Q1 delivery report that missed expectations.

Tesla confirmed a significant staff reduction exceeding 10% globally, according to an internal memo. This news comes on the heels of a disappointing Q1 delivery report and follows a larger trend of slashing workforce within the auto industry.

CEO Elon Musk Explains Rationale for Layoffs

In an email memo sent to Tesla staff, CEO Elon Musk emphasized the need for cost-cutting and increased productivity as Tesla prepares for its "next phase of growth." He acknowledged the difficulty of the decision, stating, "There is nothing I hate more, but it must be done."

With a pre-layoff headcount of roughly 140,000 employees worldwide, this reduction could impact at least 14,000 workers. Tesla's stock price also took a hit, closing Monday 5.6% lower and reaching its lowest point in nearly a year.

The layoffs follow a Q1 delivery report that fell short of analyst expectations. Tesla also reported a surplus of over 46,000 undelivered vehicles. This suggests the company is feeling the pinch of slowing electric vehicle demand, both domestically and internationally.

Notably, this marks Tesla's first year-over-year quarterly delivery decline since 2020.

Tesla Layoffs Raise Concerns

Dan Ives, a Tesla bull at Wedbush Securities, expressed concern about the layoffs, citing Monday's stock price decline. Despite this, Ives maintains a Buy rating and a $300 price target for the stock.

Musk has previously highlighted high interest rates and overall price increases as obstacles to EV adoption, emphasizing lower prices as a key growth driver. Investors and analysts were anticipating Tesla's rumored next-generation vehicle, expected to start around $25,000, as a potential solution.

However, recent reports suggested this project had been scrapped. Musk countered these reports, calling them "false" and announcing an upcoming Tesla robotaxi debut on August 8th.

Earnings Report and Future Plans

Tesla is scheduled to report earnings on Tuesday, April 23rd. This report is likely to address the layoffs in more detail, including their financial impact and the company's near-term demand outlook.

Investors and industry watchers will be closely analyzing these developments to understand Tesla's strategy for navigating the evolving EV market landscape.