Tesla is reportedly undergoing an assessment of employee positions, raising concerns about potential layoffs as managers receive single-line queries regarding job criticality after the cancellation of some biannual performance reviews.
Bloomberg reported that unidentified sources said completed employee performance reports were revisited, with an inquiry on the significance of a worker's position. Managers who are unable to provide their superiors with a compelling response to that query risk having their staff numbers cut down.
With 140,473 employees globally as of December 31, 2023, Tesla's stock experienced a 2.7% increase in premarket trading in response to the news, attempting to recover from a year-to-date slump of over 25%, as reported by Reuters.
This development follows CEO Elon Musk's warning of slowing sales growth and heightened Chinese competition despite renewed discounting efforts. Tesla lost its top spot in electric vehicle (EV) sales to China's BYD in Q4.
Geared Towards AI
Elon Musk has openly discussed Tesla's long-term potential in artificial intelligence (AI). The tech tycoon, who owns 13% of Tesla, stressed the need for a 25% voting stake to advance his robotics and AI agenda. However, Musk expressed discomfort with leading these initiatives without the required voting control.
Adam Jonas, a Morgan Stanley analyst, emphasized the complexity of Tesla's value to companies involved with EV sales and cited the significance of Tesla's DoJo AI-powered supercomputer. Jonas estimated its potential to add over $500 million to Tesla's market value through accelerated adoption in mobility (robotaxis) and network services (software as a service).
GlobalData reported Tesla's sustained prominence in recruiting, with AI and cloud-themed hiring offsetting an overall decline in job postings.
Analyst Steve Man cited price reductions and sluggish demand as total EV industry issues. Tesla's approach to short-term issues matches EV market trends. Despite rising EV sales, the 2021 supply bottleneck caused an overstock.
According to Fortune, Elon Musk started a price war in Q4 in which Ford subsidized every EV sold, which led to a negative 98% margin for the Model E division. Tesla foresees "notably lower" growth in 2024, prompting a need for increased efficiency with projected higher cash outlays in 2024.
Tesla's CFO, Vaibhav Taneja, acknowledged limited opportunities for further cost reductions during the Q4 investor call, possibly leading to a focus on human resources for enhanced efficiency.
Tesla Hiked Pay for US Workers
In separate news, internal documents Business Insider accessed last month indicated that Tesla increased pay for all of its factory workers in the United States.
The new pay guidelines, announced in December and put into effect on January 8, show a pay range of $22 to $39 per hour for factory workers at Tesla. The pay tiers are divided into three regions based on the cost of living, with the lowest pay in Tesla's factories in Austin, Texas, and Sparks, Nevada, and the highest pay in Fremont and Palo Alto, California. Comparatively, the average auto worker earned around $28 per hour in the previous year.
Tesla categorizes its factory workers into seven levels, with Level 1 workers in the lowest-paying regions eligible for $22 an hour, while Level 7 workers receive $35.50 in the highest-paying regions, like Fremont. Workers can potentially move between levels every six months based on performance and overall company results.
A bonus system known as Cyber Wallet is part of the pay package. It is given out every six months and is contingent upon employee performance and business outcomes. Bonuses can be used toward paid time off, cash prizes, or stock options.
Tesla announced the "market adjustment pay increase" in January for production associates and leads. The company's internal document outlines a five-point system for performance reviews, with ratings determining eligibility for bonuses and the nature of rewards.
The EV manufacturer has not yet commented on the issue.
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