Tesla Stock Slides On Reports of California Layoffs, Office Closure

Tesla has reportedly closed its San Mateo office, and laid off 200 employees, as it begins a wave of cost cuts throughout the carmaker’s global operations.

Tesla  (TSLA) – Get Tesla Inc. Report shares edged lower Wednesday following a report that the clean-energy carmaker has laid off around 200 workers in a California office focused on its auto pilot system.

The layoffs, first reported by Bloomberg, are said to affect hourly workers at the San Mateo location — which we reportedly face closure — in a move that would contradict CEO Elon Musk’s assertion that the 10% job cuts he said would be needed would only affect salaried employees.

In a company-wide email sent earlier this month, Musk warned of a “”super bad” feeling about the global economy and cautioned on impending job cuts.

The San Mateo decision also suggests Tesla is heading into a period of deep cost cuts following a difficult second quarter marred by production halts in Shanghai, surging input costs, supply chain snarls and the worst three-month decline for bitcoin — a major Tesla investment — in more than four years.

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Tesla shares were marked 1.5% lower in pre-market trading at $687.30 each, a move that would extend the stock’s year-to-date decline to around 35%.

Short interest in Tesla shares remains elevated, according to recent data from S3 Partners, with bets against the stock representing around $19.3 billion in value, or 2.56% of the stock’s outstanding float.

Earlier this month, Tesla boosted the cost of its long-range Model Y by around 5%, to $65,990, while the base cost for the Model 3 long range sedan rose $2,000 to $57,990. Model S prices were increased by $5,000 to $104,990. The changes mark the second price increase of this year and the third since last October.

Raw materials prices, as well as labor costs linked to overall production cycles, have risen steadily over the past year, while Nickel prices — a crucial component in EV battery making — have risen around 30% so far this year to around $25,500 per ton on the London Metals Exchange, while battery-grade lithium carbonate prices are up around 60% from early 2021 levels.

Tesla said earlier this spring that current quarter deliveries should be flat when compared to the first three months of the year, even with the multi-week shutdown of its Shanghai gigiafactory — which made around half of the group’s cars last year — amid China’s ‘zero Covid’ crackdown. The full-year delivery estimate stands at 1.47 million units.

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