Tesla, Inc. is getting ready to let go of 693 employees at its Sparks, Nevada site, as reported in a government filing on April 27. According to Reuters, the downsizing initiative is equivalent to over 10% of its global workforce and is a result of lower sales and heightened competition in the electric vehicle industry.
The company submitted a notice to the Nevada Department of Employment, Training, and Rehabilitation earlier in the week in accordance with U.S. labor laws, which mandate that companies with 100 or more staff must give 60 days’ notice before significant layoffs or facility closures, as per the report.
The statement was made following Tesla’s announcement of significant layoffs in Texas and California affecting as many as 6,020 employees. This is a component of a larger cost-saving initiative in response to the evolving dynamics that the electric car manufacturer is responding to within the market. By the end of 2023, Tesla had over 140,000 employees globally. Therefore, the recent layoffs constitute a significant proportion of its workforce, according to the report.
Layoffs follow Tesla’s price cut
In order to address decreasing sales and increasing stockpiles, Tesla Inc. revealed plans to reduce its electric vehicle costs in China and the US, effective April 21. The automaker’s strategic realignments are concentrated on its two most crucial markets and are following a disappointing first quarter, as per Bloomberg.
Tesla faced increasing challenges amidst intense competition in the electric vehicle industry, prompting price reductions. The company ideally wants the move to boost sales and reduce the growing inventory levels caused by slower-than-expected demand.
Tesla Inc. has reduced the initial cost of its Model Y to $42,990 in the U.S., marking the most affordable price for the SUV model so far. As per a report from Bloomberg, the car manufacturer located in Austin has decreased prices for the enhanced editions of the Model Y and Model X by $2,000, setting new all-time lows.
The pricing cap comes after a chaotic week for Tesla, which started with CEO Elon Musk revealing plans to cut over 10% of its worldwide workforce, totaling more than 140,000 employees. Two high-level managers departed as well within the same week.
Adding to Tesla’s troubles, the company has recently declared a recall of approximately 3,900 Cybertruck trucks due to an issue with the accelerator pedals that could come loose and unexpectedly accelerate, possibly leading to an accident.
On the subject of corporate governance, Tesla announced that it would be presenting a $56 billion compensation plan for Musk to shareholders for another vote, as it was previously invalidated by a Delaware court earlier in the year. This sequence of occurrences highlights a significant period of transition for the electric car company.
