American electric automaker Tesla is reportedly planning to freeze hiring and implement a round of layoffs in the coming fiscal quarter, trusted sources told Electrek on December 21.
Key Facts
Several employees have apparently been informed by Tesla that it has temporarily stopped hiring, as per trusted sources familiar with the matter. Furthermore, Tesla added that teams can anticipate layoffs in the first quarter of 2023.
This news comes as a surprise, given that Tesla currently has expansion plans in several of its manufacturing facilities. However, the source has not disclosed the extent of the company’s hiring freeze.
Tesla’s stocks
Interestingly, the news broke while Tesla’s stock was declining and CEO Elon Musk was facing criticism for his Twitter antics.
Tesla’s stock has been declining all year even though the company has mostly always had record-breaking sales. Notably, a general market decline in 2022 is partially to blame for this. Still, Tesla’s stock has not been moving in lockstep with the market lately.
Another factor that is thought to be impacting the automaker’s stock price is its speculated issues with demand. It was further exacerbated when Tesla provided temporary discounts and benefits on its EVs.
InsideEVs also reported that the presumed backlog for Tesla’s electric vehicles worldwide dropped below 200,000 units which could be affected by the automaker’s production ramp-up. In fact, 3,000 Model Ys each week are currently being produced in Gigafactory Texas and Gigafactory Berlin-Brandenburg.
In the US, demand may be affected due to the impending eligibility of Tesla vehicles to the $7,500 federal tax credit for 2023.
Are these reasons sufficient to reduce headcount and plan for a possible economic downturn? It is worth noting that the profit margins on Tesla’s electric vehicles were higher than usual. That said, it might still increase sales by lowering prices.
