Tesla CEO Elon Musk recently sent an internal email to employees acknowledging that severance packages given to some laid-off workers were too low and apologizing for the mistake. The electric vehicle company announced earlier in the week that it would be cutting over 10% of its global workforce, which totaled about 140,000 employees. Few details have been provided about the layoffs, but Musk stated in a companywide memo that it was necessary to “prepare the company” for its next phase of growth.
Reuters reported that Tesla would be shifting its strategy and focusing on robotaxi development rather than producing a more affordable electric vehicle, a plan that Musk appeared to confirm in a post on X. It remains unclear whether Tesla will continue with Musk’s 2023 master plan, which aimed to reach a sustainable global energy economy through electrification and sustainable electricity generation. The company reported an 8.5% year-over-year decline in first-quarter deliveries, marking the first drop since 2020.
Tesla is scheduled to discuss first-quarter results with shareholders on April 23, where executives are expected to provide more details about the restructuring and how different departments were impacted by the layoffs. In a proxy filing on Wednesday, Tesla asked shareholders to approve a CEO pay package for Musk that is equivalent to a record compensation plan previously granted to him in 2018. This earlier plan, valued at $56 billion, was voided by a Delaware chancery court judge who deemed that Musk, as CEO, controlled Tesla, and the compensation committee was not independent.
Tesla’s shares have declined by about 37% this year, as of Wednesday’s close at $155.45. The company’s faltering stock performance comes at a critical juncture for Musk and Tesla, as they navigate the reorganization and strategic shifts. The layoffs and focus on robotaxi development suggest a new direction for the company as it aims to position itself for future growth and success in the electric vehicle market. The upcoming shareholder meeting to discuss first-quarter results will provide more insight into Tesla’s plans moving forward and how it plans to navigate the challenges ahead.
