Elon Musk's Tesla Expects to Incur Expenditures of Over $350 Million as Result of Mass Layoffs

By Jace Dela Cruz

Apr 25, 2024 06:02 AM EDT

Elon Musk's Tesla is poised to incur more than $350 million in expenses in the second quarter due to the mass layoffs that started last week.

According to Reuters, this move comes as Tesla shifts its focus to developing more affordable models that will be introduced by early 2025.

Tesla CEO Elon Musk talks to media as he arrives to visit the construction site of the future US electric car giant Tesla, on September 03, 2020 in Gruenheide near Berlin.
(Photo : ODD ANDERSEN/AFP via Getty Images)

'Next Phase of Growth' of Tesla

The decision to lay off approximately 10% of its global workforce is to streamline operations in preparation for the "next phase of growth," primarily to decrease costs and enhance productivity.

Tesla indicated that it is actively working on creating new models utilizing its existing platforms and production lines. It is anticipated to provide better control over capital expenditures amid uncertain market conditions.

READ NEXT: Tesla Stock Plummets Following Elon Musk's Memo Announcing 10% Global Workforce Layoff 

$2.24 Billion Profit Projection

According to data from LSEG, analysts on Wall Street are projecting a profit of $2.24 billion for Tesla in the second quarter. While this forecast represents a decrease compared to the previous year, it marks an improvement from the $1.59 billion profit reported in the first quarter, which was the lowest in three years, Reuters reported.

The electric vehicle market has experienced a slowdown in demand over the past year, partly attributed to high borrowing costs that prompted consumers to reconsider purchases.  

READ MORE: Tesla Spends $200,000 in Promoting Elon Musk's Social Media Platform X Following Mention of 'Minimal Advertising Efforts'

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