Tesla’s 700 Job Cuts Send Shockwaves Through Nevada’s Economy

After announcing plans to reduce 10% of its workforce, Tesla has shared the next location for mass layoffs. 

New Layoff Details

The world’s biggest EV manufacturer has finally started announcing the details of its mass staff reduction efforts this year, and a facility in Nevada is the latest location to be hit.

Job Cuts in Nevada

A government filing was made on April 27, declaring Tesla’s plan to lay off 693 employees working at company facilities in Sparks, Nevada. 

10% Layoffs Company-Wide

The job cuts are part of an announcement by Elon Musk earlier this month, sharing the company’s plans to lay off 10% of its global workforce as part of its “next phase” of growth.

Filed With the State

The filing was submitted to the Nevada Department of Employment, Training, and Rehabilitation this week, in line with US labor laws that require companies to give at least 60 days’ notice before making any major layoffs.

Effective in June

Nevada layoffs will be in effect as of June 14, 2024, just a day before similar layoffs become effective at a company site in Buffalo, New York, where 285 job losses were announced earlier this month.

Texas and California Too

This announcement also trails the recent news of layoffs in Texas and California which affected up to 6,200 workers between both states. 

Bad News for Nevada

Though it pales in comparison to the California and Texas numbers, it certainly is a major layoff for Nevada. In fact, it is one of the biggest mass layoffs the state has faced so far this year. 

Behind Tropicana

It comes second only to the closure of the Tropicana Las Vegas, a historic hotel-casino that was shut down in April and resulted in 744 job losses for Tropicana employees.  

A Major Employer for the State

Tesla has been a major employer in Northern Nevada for several years and even pledged to expand its operations in the area via a $3.6 billion investment after the company received a $330 million tax abatement from the state government.

Tesla Staff Reductions

With a global headcount of more than 140,000 staff as of late 2023 according to a filing with federal regulators, company layoffs are expected to meet or exceed 14,000 jobs.

A Necessary Move

Tesla staff received a memo two weeks ago announcing the mass layoffs, which CEO Musk described as a necessary move to help facilitate incoming changes to the company structure.

Results of Thorough Review

“We have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally,” the memo read.

“Duplication of Roles”

“Over the years, we have grown rapidly with multiple factories scaling around the globe,” it continued.  “With this rapid growth, there has been duplication of roles and job functions in certain areas.”

Bad Quarter for Tesla

The layoffs are a cost-cutting strategy due to falling sales and under-delivery by the EV manufacturer. As of the first quarter of 2024, Tesla reported a 9% drop in revenue, the largest drop in over 10 years. 

“Next Phase of Growth”

Musk also acknowledged this in a separate email. “As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” he wrote. 

Competition Heats Up

Growing global competition is also a problem, with Chinese EV companies like BYD ramping up production, and being able to produce models at a lower cost than Tesla. 

Price Slashing 

Reducing product prices was the next move for the company, particularly to combat rising competition. Tesla cut prices for three of their five vehicle models, including the Model Y and Model X, in the same week that the layoffs were announced. 

Will It Stop At 10%?

With 6,200 jobs axed in Texas and California, approximately 700 in Nevada, and 300 in New York, Tesla layoff announcements have now met roughly half of its 10% goal. However, it is unclear if the company will stop at that initial 10% figure.

Rumors of Further Layoffs

Recent reports have circulated that Musk may be pushing for even more global layoffs as part of Tesla’s “next phase.”

Potential for More Cuts

If these reports are verified the company could be looking at more than 20,000 positions axed, and even as much as 20% of its global workforce reduced. 

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The post Tesla’s 700 Job Cuts Send Shockwaves Through Nevada’s Economy first appeared on Mechanic Insider.

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For transparency, this content was partly developed with AI assistance and carefully curated by an experienced editor to be informative and ensure accuracy.