How long can Tesla survive more than 10% of global layoffs?

According to media reports, electric car maker Tesla sent an email to all employees on Monday, announcing that the global layoffs of more than 10 percent, about 14,000 employees, in some positions the reduction is closer to 20 percent.

Musk stressed in the letter that the current period to reduce costs and increase efficiency is extremely important for Tesla.

This marks Tesla's fifth major layoff since it cut 2% of its workforce in 2017. Despite several rounds of layoffs, Tesla's overall workforce has grown substantially, from 38,000 employees at the beginning of 2018 to 140,000 this year.

The layoffs also include two senior executives, Drew Baglino, an 18-year senior vice president who led engineering and technology development for batteries, motors and energy products. The other is Rohan Patel, vice president for public policy and business development.

The news sent Tesla's stock down more than 5.5% in overnight trading on Monday. Tesla shares are down more than 35% so far this year.

The largest global layoff in Tesla's history means that one in every 10 Tesla employees will lose their jobs. It's a staggering number, and one can't help but wonder: "How much longer can Tesla hold on?"

The layoffs reflect Tesla's most difficult time. Demand for electric vehicles continues to be sluggish, and the company's deliveries in the first quarter fell sharply and were much lower than previously expected. These have painted a dim color for Tesla, and people can not help but lament the fate of Tesla.

Any company, regardless of size, goes through highs and lows. Tesla, facing a sluggish electric car market and flagging global sales, has chosen to lay off workers the hard way to stay afloat. This may be a measure of last resort, but also reflects the frustration of Musk and his leadership team.

The reasons for Tesla's global layoffs mainly include the following:

First of all, Tesla is forced to deal with the slowdown in the demand for electric vehicles, the difficult climb of production capacity and parts shortage and other factors have affected Tesla's sales, sales decline is the main reason for the decision to accelerate layoffs, which is inseparable from the increasingly fierce competitive environment.

Secondly, Musk once pointed out in an internal email that due to the rapid expansion of the company and the large-scale expansion of multiple factories, the roles and job functions of some departments overlap, and in order to reduce costs, the company also needs to cut these employees.

In addition, although Tesla has tried to stimulate market demand through price reduction strategy, the effect is not as expected.

On March 16, 2024, Tesla began to push the latest FSD Beta V12.3 version of Advanced Driver assistance system to FSD subscribers and subscribers across the United States, and reduced the monthly subscription fee by 50% to $99 on April 13.

But for now, FSD's pricing seems to be out of reach for the vast majority of consumers. According to the latest survey, only 5.6% of respondents said they would pay $12,000 for a complete FSD.

The combination of these factors has led to a series of problems for Tesla: slowing sales, reducing market demand, and rising costs have forced the company to adjust, and layoffs are a way to achieve cost control. Although painful, it may be the only way for Tesla to survive the current difficult times.

The immediate effect of the layoffs was a significant reduction in Tesla's operating costs, which created conditions for the company to improve its financial position in the short term. In the long term, however, frequent mass layoffs can raise questions about product quality and the stability of the company. The departure of technology leaders has deepened doubts about Tesla's ability to innovate, after all, they are the key to helping Tesla maintain a leading position in the electric car market.

In the future, Tesla will need to prove that it can survive in harsh environments. First, Tesla needs to solve the battery supply problem and continue to develop new battery technology to maintain a competitive edge. In addition, Tesla needs to determine effective market strategies, strengthen research and development investment, improve product attractiveness, improve service quality, in order to adapt to the changing market demand. Even in the face of layoffs, Tesla needs to maintain employee morale, because efficient teams are key to the company's success.

For Tesla now, the impact of the layoffs has not yet been fully felt. Downsizing is a short-term strategy that needs to be aligned with long-term goals to achieve maximum effect. The layoffs may have brought Tesla a brief respite, but it will take hard work to restore sales. Otherwise, Tesla's dream of leading the electric car market may be difficult to realize.