“I apologize,” Elon Musk wrote in an email to all Tesla employees.

Tesla shareholders are furious over the electric carmaker’s worst quarterly results in seven years, the Financial Times (FT) reported. A slump in demand for electric vehicles and a price war are causing Tesla to plummet, forcing Elon Musk to warn of the prospect of laying off 20% of its workforce, or 28,000 employees.

Specifically, Tesla CEO Elon Musk warned that the rate of layoffs will correspond to the rate of sales decline in the first quarter of 2024. Thus, with a 20.1% decline to only 386,810 electric vehicles in the first quarter of this year, Tesla will likely lay off up to 28,000 people, something that has never happened to this electric car company known as the world’s number 1.

Previously, according to some leaked documents, Business Insider (BI) said that Tesla is likely to lay off 10% of its workforce, equivalent to 14,000 employees. However, with the current poor results, it is likely that Elon Musk will lay off more.

“Over the past few years, we have had explosive growth globally. This growth has created unnecessary duplication of work in some places,” said Elon Musk.

However, according to FT, the reason for Tesla’s mass layoffs and current crisis does not come from the explosive growth of the past few years. In fact, they come from Elon Musk’s own ambition for self-driving electric taxis, thereby missing out on the cheap electric car market to China.

Tesla’s Chaos

According to Tesla employee sources, chaos is all too common at this electric car company when the top leader Elon Musk often suddenly changes plans after setting clear goals, then forces subordinates to work hard to follow these changes.

If the electric car boom made shareholders overlook this chaotic style a few years ago, that’s no longer the case. Tesla’s stock price has fallen more than 40% from its peak, sales have slumped, and Elon Musk has made a series of confusing product development and price cuts.

The FT reported that shareholders of this electric car company are upset when they learned that Tesla is delaying the development of its low-cost $25,000 electric car called Model 2, to focus on Elon Musk’s dream of self-driving electric taxis.

Although Elon Musk denied changing plans for the Model 2, he also admitted that the move to focus resources on self-driving electric taxis was indisputable with the aim of launching the product in August this year.

Even FT sources said that Elon Musk proactively changed the plan for the launch and development of a low-cost electric car line, a project that has been in development for the past 4 years, thereby prioritizing self-driving electric taxis.

Elon Musk’s decision is facing doubts from shareholders as the low-cost electric car market is helping Chinese competitors expand strongly globally without having to reduce car prices, eroding profits.

While the Tesla billionaire canceled his last-minute visit to India, raising questions about shifting production from China, shareholders are being asked to restore a $56 billion stock award to Elon Musk that was rejected by a court in January 2024.

Elon Musk’s attitude of turning directors and shareholders into “servants” has added fuel to the fire when Tesla’s operating profit in the first quarter of 2024 decreased by 40%, while revenue is expected to fall 8% for the first time in 4 years.

After the news of unprecedented mass layoffs, all shareholders and employees are more skeptical about Elon Musk’s gamble when betting Tesla’s fate on self-driving electric taxis. Sources of FT said that Elon Musk’s close subordinates are currently full of anxiety about the leader’s confusing decisions.

8 year gamble

The idea of ​​creating a self-driving electric taxi has been researched by Tesla for at least eight years, but the company has not created the necessary infrastructure or even received approval from authorities to test a prototype on public roads.

Despite the difficulties in the self-driving electric taxi segment, Elon Musk has not paid attention to the cheaper electric car segment, even though this is the factor that makes Chinese competitors successful.

So discouraged, even some longtime executives like Drew Baglino, who has headed Tesla’s energy business and powertrain engineering for the past 18 years, have resigned.

At the age of 52, Elon Musk has steered Tesla out of trouble many times in the past. Currently, with a total market capitalization of 469 billion USD, although it has decreased by more than half compared to its peak of over 1 trillion USD, Tesla is still valued 9 times higher than traditional automobile corporations such as GM, Ford…

However, Tesla’s evaporation of nearly $350 billion in market capitalization in just 4 months is also causing extreme confusion among employees, shareholders, and Elon Musk fans.

It should be noted that Tesla has tried to convince regulators and customers about its multi-thousand dollar self-driving product service. Despite the technical controversy, Elon Musk argued that simply adding cameras to the software to determine how to control the car using FSD technology instead of software code is more accurate and cost-effective.

Ironically, a series of accidents involving Tesla’s self-driving program has left the service in the crosshairs of consumer skepticism and prompted an investigation by the US Department of Justice.

So when Elon Musk promoted a self-driving electric taxi without a steering wheel or pedals, many people immediately questioned whether this product could ever be mass produced and accepted by consumers and authorities.

This difficult move by Elon Musk instead of choosing the easier option of a cheap electric car has confused many people, especially when the company’s newly launched electric pickup truck Cybertruck had to recall nearly 3,900 units to fix the accelerator pedal error.

Cold and inhuman

BI’s sources said that many fired Tesla employees said that Elon Musk’s way of firing them was too cold and made workers who had devoted many years to this business feel deeply hurt.

The firing emails arrived at midnight on Sunday while everyone was asleep. Then on Monday morning, there was a gridlock at the Tesla factory gate when employees couldn’t swipe their badges to get to work. People were sent to a parking lot where security had to swipe their badges to confirm who was staying and who was leaving.

People’s anger gradually increased when on the Saturday night before the email announcing his dismissal was sent, Elon Musk was still happily posing on the red carpet to talk about his biopic.

Then, while employees were being fired en masse, the Tesla boss was still trying to urge shareholders to reclaim his $56 billion stock bonus. Ironically, although he clearly remembered the bonus, some of the severance packages for employees were incorrect, forcing Elon Musk to personally apologize.

“Today I realized some of the severance packages were too low and incorrect. I apologize for this mistake and they are being corrected immediately,” Elon Musk wrote in an email to employees.

Despite these apologies, more and more shareholders and fans are losing patience with Elon Musk. The dream of self-driving technology that Elon Musk touted is no longer accepted in many places.

In 2016, some states like Arizona welcomed Uber’s self-driving cars only to ban them after a fatal pedestrian collision in 2018. Uber sold all of its self-driving cars two years later.

Right now, it’s the affordable electric cars and hybrids that are the trend, not the autonomous electric cars or electric taxis. Even if federal agencies take a permissive approach to this new technology, it’s impossible to monitor it at the state and many remote local levels.

If an accident happens, who will be responsible? The driver or Tesla, the company that developed this self-driving technology?