- Elon Musk wanted Tesla to reduce its workforce by one-fifth, Bloomberg reported.
- Musk wanted the layoffs to match the drop in quarterly vehicle deliveries.
- Tesla delivered 386,810 cars in the first quarter of 2024, a 20.1% drop from the last quarter.
Tesla CEO Elon Musk at one point wanted the EV giant to trim its workforce by 20%, Bloomberg reported on Sunday, citing a person familiar with the matter.
The reduction, Musk reasoned, should match the reduction in vehicle deliveries between the fourth quarter of 2023 and the first quarter of 2024, per Bloomberg.
This is one of the things about businesses I don’t get.
If you cut your staff, your ability to make money goes down with them. Why would layoffs be the reaction to reduced sales? It’s like they don’t have any money in savings or something.
Oh wait.
They don’t get paid in relation to actual performance. They get paid in stock. Which means they work to the performance of the stock. If you want a well performing company then you should tell your CEO they only get paid in relation to marginal profit. That incentivizes shipping a product that people want or need and bringing in sustainable revenue. Then make it clear that safety violations and mandatory recalls (but not voluntary) are paid for from the CEO’s compensation.
The entire idea of stock based ownership in companies is a poison pill to capitalism and the economy in general. Owning stock should make you a creditor, nothing more. We can have ownership by contract. Then we can also tax stock without worrying about Elon Musk losing his companies.