Tesla Inc.TSLA CEO Elon Musk has seemingly indicated a strategic shift, after laying off over 10% of the company’s global workforce, by liking a social media post suggesting he’s re-entering “wartime CEO” mode.
What Happened: Following reports of the layoffs, a user named Chris Zheng, who identifies as a Tesla enthusiast and a creative content creator from Shanghai, posted that Musk was re-entering “wartime CEO mode” and focusing the company entirely on its robotaxi project.
Zheng included a screenshot of his prediction, supposedly made hours before news of the layoffs broke.
“I told you that Elon has re-entered wartime CEO mode. This scene is familiar to the veterans of the Tesla community. Today Elon decided to bet the entire company on Robotaxi. I don't know if all in Robotaxi is right or wrong. I don't have the answer,” Zheng posted.
Musk “liked” Zheng’s post, which could be interpreted as a sign of agreement.
See Also: Everything You Need to Know About Tesla Stock
Zheng also expressed mixed feelings about the layoffs in China, particularly the partial layoff of an engineering team dedicated to Autopilot localization.
Wartime Vs. Peacetime CEO
A “wartime CEO” refers to an executive who leads a company through an impending crisis, such as intense competition or supply chain disruptions. Peacetime CEOs focus on expanding existing opportunities.
In an email to Tesla employees announcing the layoffs, Musk stated the aim was to reduce costs and eliminate duplicate job roles.
Tesla’s fundamentals have faltered since 2022 and the stock has become one of the worst performers in the S&P 500 despite overall market strength. This is likely due to a combination of factors: rising interest rates, slowing EV adoption, Tesla’s own missteps in managing risk (including price cuts that triggered an industry price war and hurt margins), and investor concerns about communication and Musk’s divided focus.
Senior Departures And Restructuring
Following the layoff reports, senior Tesla executives Drew Baglino and Rohan Patel announced their departures from the company on X and were thanked for their contributions by Musk.
“About every 5 years, we need to reorganize and streamline the company for the next phase of growth,” Musk said on the social media platform about the sweeping job cuts.
Focus on Robotaxi and Dropped Projects
Electrek also reported that Tesla is prioritizing its robotaxi program by dropping other projects under development at its headquarters. This includes seemingly shelving a cathode factory project at Giga Texas in favor of a data center for the robotaxi initiative.
The cathode factory, led by Baglino (who departed), was intended to supply processed cathode material for Tesla’s in-house battery cell production.
Got Too Big To Handle?
Tesla’s workforce has ballooned over the years. By the end of 2023, it had 140,473 employees globally, a nearly 200% increase from 48,016 full-time employees at the end of 2019. In comparison, legacy automaker General Motors had 163,000 employees at the year’s end.
However, Tesla’s revenue per employee in 2023 was lower than its competitors. The EV giant generated roughly $690,000 per employee, compared to over $1 million for GM and $937,000 for Ford, as per Reuters.
Why It Matters: Tesla is gearing up to unveil its robotaxi on Aug. 8. Musk has previously described it as a revolutionary design “looking like the future.”
Earlier this month, Reuters reported Tesla had canceled its low-cost electric vehicle (often referred to as the Model 2) to focus on robotaxis built on the same platform. While Musk denied the report without specific details, it left investors questioning the Model 2’s future.
Amidst uncertainty about a sub-$30,000 Tesla electric vehicle, Wedbush analyst Daniel Ives has argued the company cannot afford to shelve the Model 2, stating, “Robotaxi is not the answer for now; Model 2 needs to be on the Tesla blueprint.”
While some enthusiasts appear to be praising the CEO following the layoffs, Electrek editor-in-chief Fred Lambert mentioned on X that one of the laid-off managers described Musk as a “pigeon CEO” who “comes in, shits all over us, and leaves.”
Image created using photos on Shutterstock
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