Tesla Stock Drops Nearly 6% After Significant Job Cuts in Supercharger Team

Key Takeaway

• Tesla's stock fell nearly 6% after cutting 500 jobs in its Supercharger team, signaling a strategic shift and operational streamlining.
• The company is reducing the expansion of new Supercharger locations to focus on uptime and capacity of existing sites amid financial pressures.
• Facing its steepest revenue drop since 2012, Tesla adjusts to a competitive EV market with discounts and incentives, impacting profits.

Executive Shake-Up

Tesla Inc. experienced a notable decline in its stock value, nearly 6%, following CEO Elon Musk's decision to proceed with significant job cuts, impacting around 500 employees within its Supercharger team. This move is part of a broader initiative to streamline operations amidst a downturn in the electric vehicle (EV) market. The restructuring included the dismissal of key executives such as Rebecca Tinucci, Senior Director of EV Charging, and Daniel Ho, Director of Vehicle Programs. Musk's actions reflect a push for a leaner organizational structure, emphasizing the need for rapid adaptation to market conditions and internal efficiency.

Supercharger Strategy Shift

The layoffs signal a strategic pivot in Tesla's approach to expanding its Supercharger network in the U.S. Despite forming partnerships with major automotive players like Ford and GM for the adoption of the Tesla North American Charging Standard (NACS), the company is now throttling back on the expansion of new Supercharger locations. Instead, Tesla aims to focus on ensuring 100% uptime and enhancing the capacity of existing sites. This decision has raised concerns among stakeholders and industry observers about the future trajectory of Tesla's charging infrastructure and its implications for the broader EV ecosystem.

Financial Pressures and Market Response

Tesla's decision to cut jobs and scale back on its Supercharger network expansion comes against the backdrop of a challenging financial quarter. The company reported a 9% drop in revenue in the first quarter of the year, marking its steepest year-over-year decline since 2012. Profits also saw a significant reduction, halving in the first three months of 2024 as Tesla implemented discounts and incentives to stimulate demand. These measures reflect Tesla's response to an increasingly competitive EV market, characterized by intense price wars and growing competition, especially in key markets like China.

Street Views

• Junheng Li, JL Warren Capital (Neutral on Tesla):

  "We believe that the take rate and incremental revenue from the localized FSD– assuming the similar level of autonomous as TSLA’s latest v12 – will be significantly lower in China than in the US."

Management Quotes

• Elon Musk, CEO of Tesla:

  "Tesla still plans to grow the Supercharger network, just at a slower pace for new locations and more focus on 100% uptime and expansion of existing locations."

• Andres Pinter, co-CEO of Bullet EV:

  "My team woke up to a sharp kick in the pants this morning. Emails we sent to twenty or so different charger construction contacts were bounced with the same autoreply reading, ‘This email address is no longer valid. Any future emails sent to this address will not be received.’"