Tesla Announces More Layoffs, Upcoming Low-Cost EV Amid Shift Due to Market Pressures

The EV maker is responding to weakening demand and increased competition in the market.


Tesla has declared additional layoffs in the U.S. and is seeking voluntary job cuts at its Giga Berlin factory in Germany. The automaker also announced plans to introduce a more affordable electric vehicle by 2025.

These decisions come as part of the company's broader strategy to reduce its global workforce by more than 10% while responding to slower growth and increased competition in the EV market.

A week after a leaked email from Tesla CEO Elon Musk revealed the company planned to lay off about 14,000 employees worldwide, more layoffs at Tesla's U.S. plants in Texas and New York were officially confirmed through filings under the U.S. Worker Adjustment and Retraining Notification (WARN) Act. The filings revealed that starting June 14, Giga Texas would see a reduction of 2,688 employees from its nearly 23,000-strong workforce. Additionally, Tesla’s Giga New York facility will lose 285 of the 2,032 employees currently based there.

In Germany, Tesla is taking a different approach by encouraging voluntary departures instead of direct layoffs. The automaker aims to reduce its workforce at Giga Berlin by 400 positions, about 3% of its total employees there. Talks with the works council are ongoing, with efforts focused on managing reductions in a way that minimizes involuntary separations.

"The currently weakening sales market for electric cars is also presenting Tesla with challenges,” the automaker said. “It is always in our interest to operate our production as efficient as possible.”

Tesla said April 23, during its Q1 2024 earnings call, it will launch a lower-cost EV, referred to as the "Model 2.5," using aspects of both the next-generation and current platforms. This model is expected to be priced between $25,000 and $30,000 and will be produced using the current factory lines.

In contrast to the discouraging tone of the Q4 2023 earnings call in January, where Tesla highlighted a notably lower growth rate, the latest earnings call painted a more optimistic future. Not only did Tesla outline its plans to launch the next-generation platform and an updated lineup of vehicles earlier than originally outlined, but Musk also said the vehicles would be launched in late 2024 at the earliest.

Additionally, concerns that Tesla might abandon its more affordable models in favor of diving straight into a Robotaxi business were dispelled. Instead, Tesla seems committed to balancing innovation with accessibility, a strategy that could significantly influence its market share and investor confidence.

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