Tesla’s profits have significantly declined this year, prompting the company to accelerate the release of new models and cut thousands of jobs in an effort to improve its financial situation. The electric vehicle (EV) maker reported earnings of $1.13 billion in the first quarter of the year, a sharp decrease from $2.51 billion in the same period last year. Elon Musk, Tesla’s CEO, announced plans to eliminate over 6,000 jobs in Texas and California.
The company is facing decreased demand and stiff competition from more affordable Chinese imports, resulting in a 43% drop in its stock price throughout 2024. Additionally, Tesla announced a 10% reduction in its global workforce earlier this month. First-quarter revenue was $21.3 billion, falling short of the anticipated $22 billion.
However, Tesla’s decision to expedite the introduction of new models, initially scheduled for the latter half of 2025, led to a nearly 12.5% increase in its share price in after-hours trading. The specifics of the new vehicle pricing were not disclosed. Musk is expected to discuss these new models, which may include the previously shelved Model 2, in an upcoming investor call.
In response to declining sales, Tesla has also reduced prices across various markets. The company noted that the global EV market is struggling as many automakers are focusing on hybrids. The influx of competitively priced Chinese models has also impacted Tesla’s market position, with its stock price falling by about 40% since the beginning of the year. Despite past stock price recoveries, Tesla continues to face challenges, including a recent recall of thousands of Cybertrucks due to safety issues.
Despite the introduction of new models planned for next year, Tesla is proceeding with significant job cuts, including 3,332 in California and 2,688 in Texas. These reductions account for 12% of Tesla’s workforce in Texas, where its gigafactory and headquarters are located. Musk highlighted the creation of over 30,000 manufacturing jobs in California in response to the cuts.
An additional 285 jobs will be lost in New York. As of late last year, Tesla employed over 140,000 people, up from about 100,000 at the end of 2021. The company is also dealing with a legal battle over Musk’s compensation, which a Delaware judge deemed excessive. Tesla has asked shareholders to approve a revised compensation package for Musk, now valued at about $10 billion less due to the decline in stock value, and to support relocating the company from Delaware to Texas.
