Tesla accelerates job cuts in world’s biggest car market as EV craze dials down

The additional layoffs began earlier this week, extending cuts in mid-April that were part of the electric vehicle maker’s pledge to reduce its global headcount by more than 10%, said the people, who asked not to be identified because they were not authorized to be disclosed. information publicly.

The latest move affects a range of departments, including customer service staff, engineers, production line workers and the logistics team at Tesla’s Shanghai plant — home to more than half of the company’s global production, according to the people. Last month’s layoffs more directly affected sales representatives, they said.

It’s unclear how many people will be affected and what impact that might have on Tesla’s China operations. The company’s China-based representatives did not immediately respond to requests for comment.

Also Read: Mercedes retreats to ICE strategy amid EV slowdown

A global slowdown in EV demand has fueled Tesla’s biggest layoffs ever. But the impact has been particularly sharp in China, where intense competition from rivals such as BYD Co. and weak consumer sentiment are hurting sales. Shipments from its Shanghai factory fell 18% in April, even as the overall market for new-energy vehicles grew 33%.

According to Bloomberg News calculations, Tesla’s China market share shrank to about 7.5% in the first quarter of 2024, from 10.5% in the same period last year.

China overhaul

In addition to the ongoing cuts, Tesla’s China business will see the return of Tom Xu, who previously led the carmaker’s Asia Pacific operations and spearheaded its entry into China, Bloomberg News reported Wednesday. Xu was promoted to senior vice president of automotive in April 2023, overseeing global manufacturing, sales, delivery, service and the company’s factories from Tesla’s Austin headquarters.

The layoffs come despite Tesla winning in-principle approval from government officials to deploy its driver-assistance system in China, which would immediately boost revenue. It was approved under certain conditions and managed to clear two important hurdles: Chinese tech giant Baidu Inc. Reaching a mapping and navigation deal with and meeting requirements on how it handles data-security and privacy issues.

According to one of the people, most laid-off workers in China will receive a payment equivalent to one month’s salary worked for each year plus an additional three months’ salary. Some employees were escorted out of their workplaces by managers and some left in groups by shuttle bus, one of the people said.

Globally, a growing number of executives have left Tesla, laying off most of the company’s 500-person Supercharger team and its newly formed marketing team, and the automaker canceling offers just weeks before internships start.

Date of first publication: 10 May 2024, 08:10 AM IST