Tesla to apply brakes on hiring, layoff employees next quarter
What's the story
Tesla, the world's most valued car company, has been struggling in the stock market throughout the year. Now, the company seems to be going through something more than a share price freefall. According to Electrek, Tesla has told its employees that a new wave of layoffs will hit the firm next month. It is also going to pause hiring, as per the report.
Context
Why does this story matter?
Although Tesla's falling prices have been a cause for worry, investors have been content with the company's financials and operations. However, the new report points toward a bigger issue than underperforming stocks. Tesla has also been offering discounts on its products. Does this mean that the company is facing a demand crunch? Or, are the layoffs and hiring pause precautionary measures?
Layoff Round 1
Tesla fired 229 employees earlier this year
Earlier this year, Tesla fired 229 of its Autopilot team and shut down its San Mateo office amid supply chain issues and prolonged COVID-19 restrictions in China. The next round of layoffs will be in the first quarter of 2023. Sources close to the matter told Electrek that the company told employees that teams are expected to make cuts next quarter.
Reason
Macroeconomic headwinds and hiring inefficiencies could be behind layoffs
Tesla's expected layoffs, to a certain extent, can be attributed to the macroeconomic headwinds. After all, it's not the only company to fire employees this year. The upcoming round of layoffs could be a result of hiring inefficiencies. Tesla, like any other fast-growing company, has been hiring a lot for various projects. More often than not, this results in people getting laid off later.
Pause
Hiring freeze is a bigger problem than layoffs
More than the layoffs, it's the hiring freeze that should worry everyone. A hiring freeze will certainly be a setback to several projects. Tesla has been expanding its EV plants, with a new facility expected to be announced in Mexico soon. It needs more workers at its factories in the US and Germany. What would the hiring freeze mean for these factories?
Share price
Tesla's share price is lowest since November
In November last year, Tesla's shares hit a record high of $409.97 apiece. The EV maker is currently at a shocking $137.57 (down 66% from the all-time high), its lowest since November 2020 Investor wealth is down by over $560 billion. The company is now valued at $434.41 billion, down by 59% from $1.06 trillion at the beginning of this year.