Sales staff to bear brunt of Tesla job cuts on mainland
Sources say the impact on production at US firm’s Shanghai factory is likely to be limited
Tesla’s job cuts on the mainland involve mainly sales staff and will not affect production at its Shanghai factory, which accounts for more than half the carmaker’s total output, according to people with knowledge of the matter.
Only a few dozen employees at the Gigafactory 3 in Shanghai’s Lingang free-trade zone were told to leave, representing a tiny portion of the workforce of 20,000 engaged in the assembly of Model 3 and Model Y vehicles, according to two people with knowledge of Tesla China’s lay-off programme.
But two sales managers in Shanghai said “quite a lot of” colleagues had been made redundant in the past few days, after Tesla CEO Elon Musk told staff on Monday that the company was slashing its payroll by more than 10 per cent across its global operations.
According to Reuters, Musk told employees of the lay-offs in an internal memo, with several US-based service centres strongly affected.
Some showrooms across China were likely to face closure as their sales teams shrank as a result of the job cuts, one of the sources said.
Tesla China declined to respond to queries about the lay-offs.
The job cuts come as Tesla struggles to maintain strong sales amid an escalating price war in China, the world’s largest electric vehicle (EV) market.
The Texas-based carmaker assembled 947,742 Model 3 and Model Y vehicles at its Shanghai plant last year, which represented 52 per cent of its global total.
On the mainland, the facility reported 603,664 deliveries last year, up 37.3 per cent from the previous year. The other 334,078 Shanghai-made vehicles were exported to markets such as Germany and Japan.
“The Shanghai factory remains Tesla’s major production hub and it is understandable that the impact on production is limited,” said Gao Shen, an independent analyst in Shanghai.
“But it remains to be seen whether a smaller sales team would affect Tesla’s sales in China.”
China is now the secondlargest market for Tesla, trailing only the US where the company handed 654,888 cars to American customers last year, up by a quarter from 2022.
At present, the waiting time for entry-level Model 3 and Model Y vehicles to be delivered is two to six weeks, unchanged from a week ago, according to Tesla China’s website.
Deliveries by Tesla fell 20.2 per cent quarter on quarter to 386,810 units worldwide in the first three months of this year, according to a company statement earlier this month.
On the mainland, its deliveries between January and March dropped 3.6 per cent from the fourth quarter of last year to 132,420 units.
Tesla raised the price of its Shanghai-made Model Y cars on April 1, bucking the trend established by a discount war that is squeezing the profit margins of most of its rivals in China.
The basic Model Y saw its price rise 1.9 per cent to 263,900 yuan (HK$285,600).
BYD, the world’s bestselling EV builder, has slashed the price of nearly all of its cars by 5 per cent to 20 per cent since February 18, as the industry’s growth in China showed signs of tapering off.
The company aimed to deliver 20 per cent more electric cars this year, which would take it to 3.6 million units, chairman and president Wang Chuanfu told an investors’ conference at the end of last month. That would be significantly slower than the 62 per cent growth it recorded last year.