Hey everybody, checking back to the Elon Musk podcast, this is a show where we discuss. The critical. Crossroads. The shape. SpaceX, Tesla X, The Boring Company, and Neuralink, and I'm your host, Will Walden. One more thing before we start, Google Podcasts is being discontinued by Google. So if you want to continue getting episodes of the Elon Musk. Podcast.
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continue finding the show. Over at YouTube Music Search for Elon Musk podcast, Tesla Inc recently announced A substantial reduction of its workforce, cutting approximately 14,000 jobs or about 10% of all of its employees. That's a ongoing financial challenge at Tesla right now. It's a shift in the company's strategic direction, and there's cost reductions at foot at a new focus on specific technological advancements, such as a robo taxi in development.
And the manner in which these layoffs were conducted has drawn significant criticism. And that means that there's issues in corporate communication and management empathy at this point. Now, the layoffs were communicated via e-mail with many employees learning about their job loss in less than ideal circumstances.
And reports indicate that some employees receive their termination notices in the middle of their work shift or upon attempting to access their workplace, only to find their security credentials deactivated. This method of notification has been perceived as impersonal and indicative of poor planning and poor management, and also poor consideration for the impacted employees, emotional and
professional well-being. Now an incident at Texas Gigafactory illustrated the harsh reality of these layoffs and employee share their experience with the local news outlet stating I was literally standing outside trying to figure out why my badge wasn't working. Why is it that I can't log in only to find out that they had been laid off? Such instances show that this is abrupt and disorganized and it's not to be taken lightly.
Now, the official communication from Tesla cited A thorough organizational review and the different decisions to globally reduce headcount as the reasons behind the layoffs. The affected employees were informed that their positions were eliminated due to this restructuring, adding to the high stress situation and the uncertainty of this time.
Now, the reaction to this layoff has been overwhelmingly negative, with critics pointing out the lack of foresight and empathy in Tesla's layoff strategy. Comparisons were made to previous layoffs conducted by other companies by Elon Musk, where similar patterns of abrupt and minimally communicated job cuts were observed. From a business perspective, Tesla maintains that the layoffs are a necessary step towards adjusting to current market
demands and financial realities. The company is navigating decreased sales and a significant shift in project focus, moving away from some early automotive plans in favor of developing new technologies like robo taxis. We've heard about this for years and it looks like it may be happening now. Despite legal compliance offering laid off employees compensation through June 15th, which aligns with a 60 day notice period, the approach taken by Tesla has been questioned.
The focus appears to be on legal adherence rather than genuinely supportive practices that consider the well-being of the individuals affected. Now, personal accounts and broader reports suggest that the layoff process added significantly to the emotional distress experienced by employees. Losing a job abruptly destabilizes personal and financial plans in the manner in which these layoffs were executed only intensified these
difficulties. And while Tesla is known for its innovation and has been significant success in the electric vehicle market, company's internal practices, particularly in human resources, have often been criticized. Situation shows that Tesla and their related employee treatment is not up to par. Now, the layoffs are part of a broader context where Tesla is adjusting its strategic goals.
Earlier announcements had focused on producing a more affordable electric car, the $25,000 EV if you will. A recent shifts seem to prioritize the development of autonomous driving technology and other high tech products. This restructuring shows that the market is changing and the operations at Tesla are also changing, including missed delivery dates that have happened recently and reported issues with the launch of new models like the Cybertruck.
Additionally, rumors about the cancellation of the low cost Model 2 vehicle have added to uncertainty, although Elon Musk has disputed these claims financially. Tesla has experienced a significant downturn with a 37% drop in share prices this year and a notable decline in sales. The first quarter report showed a 8.5% decrease in deliveries compared to the previous year, marking the first such decline since disruptions caused by the 2020 global pandemic.
Amidst these strategic and operational upheavals, Tesla has also proposed A substantial pay package for CEO Elon Musk, similar to a previous compensation plan that was voided by a court decision due to governance concerns, this proposal is likely to be scrutinized in light of the layoffs and financial performance.
It's $58 billion, by the way, and in response to criticisms of the layoff process, Elon Musk acknowledged that some severance packages were incorrectly low and assure that these errors will be corrected. This acknowledgement, however, does little to mitigate the broader concerns about how the layoffs were managed and communicated.
Now, Musk's e-mail to employees attempted to address some of the fallout, stating as we reorganize Tesla, it has come to my attention that some severance packages are incorrectly low. My apologies for this mistake. It is being corrected immediately, and despite these efforts, the damage to employee morale and public perception may be harder to mend. And looking forward, Tesla's management faces the challenge of rebuilding trust not only with its workforce but also with
investors in the public. Company must navigate the strategic pivot while ensuring more consideration and strategic handling of its workforce, especially during transitions that involve job cuts of the layoffs at Tesla have thus sparked a broader discussion about corporate responsibility and the ethical implications of how layoffs are conducted. For a company at the forefront of technological innovation, the human element of business practices remains a critical
area for their improvement. Hey, thank you so much for listening today. I really do appreciate your support. If you could take a second and hit the subscribe or the follow button on whatever podcast platform that you're listening on right now, I greatly appreciate it. It helps out the show tremendously and you'll never miss an episode and each episode is about 10 minutes or less to get you caught up quickly.
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