Tesla to lay off thousands of employees in Fremont and Palo Alto
Electric vehicle company Tesla will lay off thousands of employees across its Bay Area locations this June, according to documents filed with the California Employment Development Department on Tuesday.
It's been a rough week for Tesla. As word spread last week that the company would lay off 10% of employees globally, the company's stock dipped by 3%. That came after Tesla CEO Elon Musk told employees in an internal memo that cost reductions made the layoffs necessary.
Initially, it was unclear how many Bay Area jobs could be affected by the layoffs, but a WARN (Worker Adjustment and Retraining Notification) notice filed by Tesla on Tuesday revealed that 2,753 jobs would be lost.
Tesla has more than 140,000 employees, so roughly 14,000 jobs, or about 10%, are expected to be slashed. It's the latest evidence of the challenges now facing the electric vehicle maker.
The news comes as Tesla has seen a drop in deliveries and demand in the first quarter of 2024. The company's website also revealed that Tesla is slashing the price of its self-driving system by 30% (down to $8,000 instead of the previous $12,000). The tech giant has also lowered prices of three of its five models across the United States by $2,000.
"In their most recent earnings announcement, they reported that their EPS, earnings per share, fell below expectations. Below the consensus of what analysts had expected. Their revenue has been decreasing for the 2nd year in a row," said Julian Vogel, San Jose State Univ. Finance Asst. Professor.
Facing more competition in the electric vehicle market, the car company has seen a drop in deliveries and lower demand for its cars in the first quarter of this year.
"Specifically in China, where BYD is leading the charge in terms of vehicles sold worldwide. Those vehicles come at lower costs than the average Tesla, are very attractive and are making inroads," said Olaf Groth, a professor at UC Berkeley Haas School of Business and CEO of Cambrian Futures.
Still, Groth says Tesla is one of the leading car companies in the world and, despite the recent layoffs, he thinks Tesla’s technology and brand marketing will keep the company afloat.
"I do believe that there’s a possibility that we’ll see more layoffs because Musk has announced that he wants to launch hot and heavy into more automated production, robotic factories. Probably a lot of A.I. in that as well," said Groth.
The layoffs are expected to start in June and after announcing that it’ll start producing more affordable cars next year, Tesla’s stock rose 11% on Tuesday.
To see which Bay Area locations are affected, see the list below.
- 1501 Page Mill Rd, Palo Alto, CA 94304 (237 employees affected);
- 3000 Hanover St, Palo Alto, CA 94304 (81 employees affected);
- 4180 El Camino Real, Palo Alto, CA 94306 (11 employees affected)
- Stanford Shopping Center, 660 Stanford Shopping Center, Suite 359B, Palo Alto, CA 94304 (2 employees affected)
- 45500 Fremont Blvd, Fremont, CA 94538 (1,452 employees affected);
- 47623 Fremont Blvd, Fremont, CA, 94538 (25 employees affected);
- 4170 Business Center Dr, Fremont, CA, 94538 (11 employees affected);
- 3777 Spinnaker Ct, Fremont, CA 94538 (8 employees affected);
- 44320-44350 Nobel Dr, Fremont, CA 94538 (6 employees affected).
- 3500 Deer Creek Rd, Palo Alto, CA 94304 (155 employees affected)
- 1220 Page Ave, Fremont, CA 94538 (1 employees affected);
- 47811 Warm Springs Blvd, Fremont, CA 94539 (3 employees affected);
- 48370 Kato Rd, Fremont, CA 94538 (17 employees affected);
- 1055 Page Ave, Fremont, CA 94538 (19 employees affected);
- 47400 Kato Rd, Fremont, CA 94538 (108 employees affected);
- 47700 Kato Rd, Fremont, CA, 94538 (214 employees affected);
- 901 Page Ave, Fremont, CA 94538 (403 employees affected)
TOTAL: 2,753 employees
The Associated Press contributed to this report.