Is Your Tesla Job Essential? EV Maker Confronts Potential Layoff Wave As R&D Spending Spikes

“Is your job critical for the company?” That’s the pressing question confronting Tesla Inc.‘s TSLA staff as the electric vehicle (EV) giant faces a slowdown in sales growth, considers mass layoffs and prepares for future expansions.

What Happened: Recent directives from Tesla management required the company’s U.S. managers to categorize the roles of their team members as either critical or non-critical, according to Bloomberg.

This move followed the cancellation of some employees’ biannual performance reviews, raising concerns about impending layoffs.

Last month, the EV manufacturer missed both earnings and revenue forecasts for the fourth quarter of 2023. Since then, shares suffered an over 10% drop.

However, the Austin, Texas-based company is now reassessing its staffing needs as it prepares for future growth phases and significant capital investments.

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Why It Matters: The likelihood of layoffs signals a sharp reversal of trajectory for Tesla.

From 2019, there was an increase in employment count at Tesla each year. Growth rates hit 47% in 2020, 40% in 2021, 29% in 2022, and 10% in 2023.

Tesla has seen significant workforce growth over the past years, doubling its global staff since 2020 to over 140,000.

The Elon Musk-led company still plans to allocate over $10 billion in capital expenditures. It also seeks to increase its research and development spending to approximately $4.5 billion. Tesla is likely nearing a limit to its ability to reduce costs on current vehicle models, emphasizing the need for continued financial vigilance.

Shares of the carmaker were up 2.7% in the premarket Wednesday, after marking a 2.2% gain on Tuesday.

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