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Update & Important caveat to readers as of 23June24:
I came to realise that the points stated in this article is only valid if the company's fundamentals & culture (ie Glassdoor ratings) are solid,
otherwise, massive layoffs may backfire for the company in the medium to long-run.
as for the case of Tesla, since their Glassdoor ratings is not satisfactory, hence I would deem the points mentioned in this article to be less valid.
Update as of 24Aug24
At this point of time, I would deem this newly written article "Eye on the Exit: Why Layoffs Can Signal Potential Trouble for the Company in your portfolio" to be more pertinent that this article below.
That said, if you would still like to read my thoughts at the point of time when I wrote this article at the end of April 2024, I would encourage you to take them as reference only and not as a guideline particularly for Tesla's case.
As a long-term Tesla shareholder, recent news of the company laying off over 10% of its workforce sent shivers down the spines of many. But what if, instead of a sign of weakness, this move is a strategic masterstroke by the company? Let's explore this possibility.
Building a "Hardcore" Tesla
Tesla has always been known for its demanding work culture, prioritizing those who embody the "hardcore" principle. This isn't about raw talent – it's about dedication, drive, and a relentless pursuit of innovation.
The layoffs, then, can be seen as a way to refine the workforce, ensuring only those who truly fit this mold remain.
The Power of Gratitude and Scarcity
The remaining 90% of employees will undoubtedly be impacted by this move. In the current economic climate, simply keeping their jobs might foster a sense of gratitude, potentially leading them to temper salary expectations – a significant cost saving for Tesla on top of the direct savings from the layoffs.
More importantly, this situation can create a surge in motivation. The fear of losing their jobs can light a fire under employees, pushing them to perform at their peak. Complacency is the enemy of innovation.
After all, Tesla's mission of transitioning the world to sustainable energy is nothing short of revolutionary, and maintaining a "maniacal sense of urgency" is crucial for success.
The layoffs serve as a constant reminder of the high bar expected by Tesla, keeping employees on their toes and ensuring they have the capacity and resilience to deliver.
Highly Desirable Departed Employees
The laid-off employees, should not struggle to find new employment opportunities. Their skills and experience will be highly sought after by employers in the market.
While competitors like BYD might be tempted, it's unlikely to be a major threat. Established automakers and even newer EV players like Rivian and Lucid are still far behind Tesla in terms of technology and production capacity. Losing a few employees is unlikely to bridge this significant gap.
The Bullish Case for Tesla
Of course, there are potential downsides. Employee morale could take a hit, and some may indeed jump ship to competitors.
However, I believe the potential benefits seem to outweigh the risks.
A leaner, more motivated workforce fueled by a sense of urgency can propel Tesla further ahead in the race for EV dominance and beyond.
As a long-term shareholder, I believe in Tesla's long-term fundamentals. This bold move, while seemingly harsh, could be the catalyst that takes Tesla to the next level.
Only time will tell if this strategy pays off, but one thing's for sure – Tesla continues to be a company that disrupts, challenges, and innovates, and that's a recipe for long-term success.
Read more Tesla related blogs here:
Tesla stock is down 50% from it's all time high, is it a good time to pick some up now?
Why I am not "all-in" on Tesla stock, and only carry a 5 year investment time horizon on it for now.
Tesla Q3 2023 reported only 9% YoY growth, and a decrease in profits. Should investors be concerned?
How do Tesla & BYD's Finances fare against their competitors in the Auto industry as of Feb 2024?
Unpacking Tesla's 2024's February Sales Figures: CNY Impact and Long-Term EV Market Trends
Who's at the Helm? Why Founders' and CEOs' Track Record Matter in Your Portfolio
50% Tesla in my Portfolio? A Cautionary Tale of Portfolio Allocation Gone Wrong
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