Tesla's 10% global layoffs in response to declining sales: intensifying market competition and future strategy

  On April 15, according to media reports, Tesla CEO Musk released an all-staff email, which mentioned that Tesla will lay off 10% of its employees worldwide. Previously there were rumors that Tesla would conduct a round of important layoffs this week, with a layoff ratio of up to 20%, and the real layoff ratio does not match the rumors so far. Behind the layoffs is the sales pressure faced by Tesla. 2024 quarter, Tesla global delivery of about 387,000 electric vehicles, a year-on-year decline of 8.5%, is the first time in nearly four years, quarterly sales decline, and the reasons for the decline in sales is attributed to "force majeure", including the outbreak of the Red Sea crisis, and so on. Recently, Musk also said in a program on the social media platform X, Chinese automakers are "the world's most competitive", will constitute a "serious competitive challenge" to Tesla.

  Tesla "swings the knife", the first quarter sales "first drop in four years" previously, according to the "Cochrane Board Daily" cited electrek news, Tesla announced to the employees of the U.S. super factory in Texas, will shorten the Cybertruck production shifts, and there were rumors that the company was preparing a round of layoffs. Some of them also revealed that the round of layoffs would involve up to 20% of the workforce, as many as tens of thousands of people.On April 15, Musk released an all-employee email setting Tesla's global layoffs at 10%, according to a report by Phoenix Tech. Some analysts believe that the annual wave of layoffs is Tesla's "routine operation", due to the rapid growth of employees, Tesla will fire some underperforming employees to improve the overall efficiency of the enterprise. Last year, Tesla's total number of employees grew by more than 10,000. on January 29, Tesla submitted to the U.S. Securities and Exchange Commission (SEC) documents show that as of the end of 2023, the total number of Tesla's global employees was 140,473 people. And by the end of 2022, the number of Tesla's full-time employees worldwide was 127,855. In one year's time, the total number of Tesla's global employees has increased by nearly 10%. However, a comparison of the number of employees over the years shows that the rate of Tesla's employee additions has declined significantly in recent years. At the end of 2020, Tesla's global workforce totaled 70,757. In 2021, Tesla's workforce totaled 99,290, a significant increase of more than 40% from 2020. in 2022, Tesla's total workforce grew by 28.77% in one year. Hiring slows down while layoffs are made, or also affected by Tesla's operational pressure.In the first quarter of 2024, Tesla delivered about 387,000 electric vehicles worldwide, down 8.5% year-on-year, which is the first time in nearly four years that Tesla has experienced a year-on-year decline in sales in a single quarter. For the reason of the sales decline, Tesla attributed it to "force majeure": firstly, the outbreak of the Red Sea crisis interrupted Tesla's parts supply and temporarily suspended the production of its factory in Berlin; secondly, in March, German environmental activists set fire to the infrastructure near the Berlin factory, which made Tesla's relevant factory lose sufficient operational capacity, and again, Tesla's factory has lost sufficient operational capacity. lost sufficient operational capacity, again leading to a shutdown; and finally, the Fremont, California factory is still in the early capacity climbing stage after the Model 3 upgrade, affecting Tesla's production and sales. The market is generally concerned about whether Tesla's past competitive advantage is rapidly declining, said a research report by Open Source Securities. In the Chinese market, the rapid rise of domestic new energy vehicle brands, electric intelligent technology level continues to improve, Tesla's technological leadership significantly narrowed. More critically, due to the supply chain cost reduction, scale effect, etc., cost-effective gradually become the focus of many new energy brands competing to BYD as the representative of the new energy vehicle enterprises to achieve rapid growth in sales, and further squeeze Tesla and other foreign brands in the Chinese market development space. However, Musk has expected the current situation of Tesla, in the letter to investors in January, Musk said: "Tesla is in the 'trough period' between two waves of growth, Model 3 and Y 'ceiling' has appeared. ' has emerged, and it will take time for new cars for the low-end and mid-range markets to hit the market." FSD may become the direction of breakout, Tesla still holds the pricing power in hand Despite the recent sales pressure, Tesla still chose to raise the price of the car. on April 1, the price of Tesla Model Y models was raised by 5,000 yuan.

  It is understood that in 2023 Model Y became the best selling passenger car in the world with 1.2 million sales. Some industry insiders analyze to the reporter, the price policy of multiple adjustments, means that Tesla holds the car in the hands of the "pricing power", this "pricing power" comes from Tesla in the field of production technology, sales and service, brand influence and other areas of competitiveness. In the "trough" period that car sales may face, Tesla is accelerating the development of software to improve the company's overall profitability. in March, Tesla released FSD version 2024.3.10 update instructions, FSD Beta officially changed to FSD Supervised, marking the FSD ("Full-Self Driving," fully automated driving, or FSD Supervised). Full-Self Driving) function has been further developed. Data shows that as of March 2023, Tesla has more than 400,000 FSD users. Currently, FSD offers buyout and subscription models, based on the standard hardware, consumers can choose to buy out or subscribe to FSD. currently, the FSD buyout price of $12,000, the subscription price of $99 / month (previously $199 / month). Open Source Securities research report said that on March 26, Musk announced that all U.S. vehicles capable of using FSD can be free to try a month of FSD, in addition to the requirement that sales in North America must take customers on a short test drive FSD before handing over the car, all of these are designed to improve user awareness of FSD, enhance FSD penetration rate, in order to bring more software payment revenue for the company. The Secretary General of Intelligent Networked Vehicles of the China-European Association, Mr. Lin Shih, said in an interview with the reporter: "Tesla is actually committed to being a civilian electric car brand, and it is going to achieve its future layout by 'going up in scale', and this layout is not entirely dependent on hardware to earn money, but also on software to earn money," he added. Earn money by its APP and self-driving ability, which is its main future profitability direction." Europe and the United States automobile industry outbreak of layoffs, Chinese car companies competitiveness enhancement In fact, not only Tesla, this year, the European automobile industry also broke out a round of layoffs. Guoyuan Securities research report said that a new wave of layoffs is sweeping German auto suppliers, including Bosch and ZF, companies are racing to reduce costs, as the industry is struggling to cope with the high cost of transition to electric vehicles. Bosch, the world's largest automotive supplier, said its software and electronics division will lay off up to 1,200 employees by the end of 2026 due to high inflation and rising raw material and energy costs, the study said. And ZF, which has seen growing tensions between management and employee representatives, is considering layoffs by 2030 as part of a restructuring plan that could see 12,000 job cuts in a worst-case scenario. The layoffs in the European and American automotive industries have been affected by the rising competitiveness of China's own-brand vehicles, in addition to cost issues. In April this year, Musk was interviewed by Nikolai Tangen, CEO of Norway's sovereign wealth fund, on a program on the social media platform X, Globe reported, citing Reuters. During the interview, Musk said that Chinese automakers are "the most competitive in the world" and pose a "serious competitive challenge" to Tesla. Data from the GGI Automotive Research Institute shows that in the first two months of 2024, the penetration rate of domestic independent brands of new energy passenger cars climbed to 85.95%, causing a squeeze on foreign brands. Among them, in the price range of 150,000-200,000 yuan, independent brands accounted for 45.96%, to Volkswagen, Toyota, Honda, Nissan and other traditional fuel car giants to bring a crisis in sales