Investing.com — Elon Musk is pushing for a 20% headcount cut at Tesla Inc. (NASDAQ:), Bloomberg reported Sunday, citing a source close to the EV maker's CEO, who said Tesla will see a drop in deliveries. In response, the company reported that it has begun converting to self-driving cars. .
Tesla cut its workforce by more than 10% last week, cutting at least 14,000 jobs. However, Bloomberg reports that the actual number of job cuts could be more than 20,000 positions.
The big layoffs come on the heels of what analysts described as a “nightmare” quarter for Tesla. The world's most valuable electric vehicle maker saw its quarterly shipments fall for the first time in nearly four years.
Deliveries in the first quarter of 2024 were down about 20% from the previous quarter, Bloomberg reported, but that figure also factored in Musk's call for 20% job cuts.
This decline was due to intensifying competition from Chinese EV manufacturers as well as a slowdown in EV demand in the US and European markets.
The EV maker is now making a big move toward robotaxis and fully self-driving software. Musk claimed on social media that Tesla's first robotaxi will be unveiled in August of this year.
Development of robotaxis is reportedly being prioritized over plans for cheaper electric models, which analysts and investors had hoped would help revive the company's sluggish sales.
But while Musk has been touting the robotaxi idea for nearly eight years, Tesla's FSD software (its name is considered a misnomer) has led to countless lawsuits against the EV maker over safety concerns. ing.
Production issues with the recently launched Cybertruck also soured sentiment toward Tesla. Last week, the company recalled about 4,000 Cybertrucks it had sold to fix a defective accelerator pad. This caused the vehicle to lock into 100% acceleration, creating a significant safety risk.
Declining sales, doubts about FSD's pivot, and uncertainty about Mr. Musk's priorities cost Tesla 39% of its market capitalization, or nearly $5 trillion, by 2024.
The stock price received little support from the layoffs, and weekend price cuts for EV models and FSD software only added to the pressure on profits for the company.
Tesla is scheduled to report its financial results, and operating profits are expected to decline significantly. Tesla is also expected to see its first decline in sales in four years.
