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American New Power Company announces layoffs!

2024-05-27 Update From: AutoBeta NAV: AutoBeta > News >


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Rivian, the US electric car maker, said on April 17th that it would cut about 1 per cent of its workforce to cut costs amid a general slowdown in demand for electric vehicles. It is understood that this is the second time that Rivian has laid off staff this year. On February 21st, Rivian announced 10 per cent layoffs in its fourth-quarter 2023 results.

Unlike Tesla, Rivian is still losing money, has weak cash reserves and is forced to lay off staff. Of course, the current economic situation in the United States is not ideal for bulk consumer goods such as cars, and the weakening demand for cars in the United States has made electric car manufacturers miserable. It is not clear how much effect layoffs can play.

Layoffs and losses have doomed Rivian's life to be difficult. It is understood that Rivian delivered a total of 50100 new cars in 2023, much lower than market expectations. During the reporting period, Rivian realized revenue of US $4.434 billion, up 167.43% from the same period last year; the net loss was 5.432 billion yuan, down 19.55% from the same period last year; and as of December 31, 2023, Rivian had cash reserves of US $7.9 billion on its books.

For Rivian, Tesla CEO Musk said, "the product design of Rivian is not bad, but what is really difficult for a car company to make a profit is to achieve mass production and positive cash flow." Mr Musk predicted that if Rivian did not cut costs sharply, the company would run out of money in about six quarters on its current trajectory, adding that "maybe the trajectory will change, but not yet".

Tesla is one of the most successful car companies in the electric car market. Musk, as the leader of Tesla, is understandably lecturing to the two "novice" car companies, but Tesla has also encountered problems recently.

On April 15th, Mr Musk issued a full letter announcing that Tesla would lay off 10 per cent of its staff worldwide. Data show that Tesla has a total of 140500 employees worldwide by the end of 2023, which means that more than 14000 employees will be affected by the layoffs. Musk said the layoffs were due to the duplication of roles and job functions in some areas as a result of Tesla's rapid growth.

It is understood that the layoffs also involve the Chinese market. Tesla's layoffs in China cover a number of departments, some of which have been laid off. The sales staff are "hardest hit", and most of the employees who have been laid off are new employees who have worked for less than six months. "this group of people pay compensation according to '0.5Nong3', because Tesla has a higher base salary, so the compensation is about 40 to 50, 000 yuan."

Another reason directly related to layoffs is that Tesla did not meet the expected delivery volume. In the first quarter of this year, Tesla delivered 386800 new cars worldwide, down 8.5% from the same period last year and 20.2% from the previous month. This is the first time that Tesla has dropped below 400000 vehicles since the third quarter of 2022, and the first quarterly decline in nearly four years.

On the day Tesla announced the layoffs, its share price fell 5.59% to close at 161.48 US dollars per share. The latest share price is 155.45 US dollars per share, with a market capitalization of 495.75 billion US dollars and a market capitalization of less than 500 billion US dollars. At present, institutions generally believe that Tesla faces major risks in the short term, including a larger-than-expected drop in car prices, increased competition for electric vehicles, delayed development of third-generation platform products and features, etc., but Tesla's growth potential still exists in the long run, benefiting from lower costs, especially battery costs. Tesla is expected to launch its long-promised mass-market electric car model later this year.

Generally speaking, whether it is Rivian or Tesla, behind the layoffs are the impact of the slowdown in the global electric vehicle market. Global sales of all pure electric vehicles grew by about 10 per cent in the first quarter of 2024 compared with the same period a year earlier. By contrast, the growth rate in the fourth quarter of 2023 was about 35%. Some experts pointed out that in order to reverse the situation, in addition to simply reducing labor costs, sales must once again develop in the right direction.

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