[ad_1]
This week has been one of Tesla’s worst weeks yet. The company cut 10 percent of its workforce, from sales consultants to engineers — the largest layoff in company history. Two top executives—the vice president of public policy and business development, Rohan Patel; and Senior Vice President of Powertrain and Energy, Drew Baglino– He announced that he was leaving. It comes amid difficult finances: Demand for electric cars is falling in the US and Europe as competition in China intensifies and labor revolts in Europe. Investors are worried: In the past six months, Tesla shares have fallen 35 percent.
For many employees, the layoffs came as a surprise. On Friday, Angela’s boss told her how well she was doing at her job, selling Teslas directly to customers in the US state of Georgia. Three days later, her role was removed, effective immediately. “I expected more from Tesla, at least to give people a week or two heads-up,” says Angela, who requested to use a pseudonym if she ever had the chance to work for Tesla again. Angela says 40 percent of her team has been fired and is in shock. About 14,000 people received the same email, which blamed the rapid growth on duplication of job roles. “We have done a thorough review of the organization and made the difficult decision to reduce our head count globally,” the email said.
Tesla is facing unprecedented challenges around the world, from slowing demand, increasing competition from its Chinese rivals, ongoing labor strikes in Sweden and vandalism by German climate activists. Earlier this month, the company warned investors to expect lower rate growth this year, blaming interest rate hikes for dampening demand. In the last three months of 2023, Tesla lost its crown as the world’s best-selling electric vehicle maker, as Chinese car company BYD sold 40,000 more cars globally than its US rival.
“(Tesla’s) main goal—having electric vehicles affordable to everyone—is actually being achieved by other companies. Tesla’s goal of releasing a low-cost $25,000 EV has already been achieved—BYD. That’s a mark of recognition at a company that was once an industry leader,” says Liana Sipsigan, a professor of transportation electrification at Cardiff University in Wales. If its role isn’t to popularize cheap EVs, then what is?
Tesla’s global fortunes are intertwined with China—now its main source of competition. The company took just 168 days to build its Shanghai factory in 2019. Musk was now hoping to corner the world’s largest EV market. But Tesla’s site also has a “catfish effect,” says Li Xing, an analyst and former editor of China Auto Review, a Beijing-based media outlet. In business, the “catfish effect” refers to introducing a big fish—a competitive company—into a tank to force smaller, weaker fish to raise their game. If that was China’s intention, it worked. In the five years since Tesla arrived in Shanghai, China’s EV sales have jumped 500 percent.
“In China, it’s not Tesla’s game anymore,” says Xing. That’s important as EV demand slows in the US and Europe. A famous Bloomberg interview clip from 2011 illustrates just how far the Chinese EV industry has come. Back then, Musk mocked BYD’s efforts. “Did you see his car?” He said with a smile.
[ad_2]