More trouble for Tesla: Layoffs, severance snafu, and a painful stock downgrade

April 18, 2024

More trouble for Tesla: Layoffs, severance snafu, and a painful stock downgrade

The EV maker saw its shares flirt with 52-week lows on Thursday as its troubles continued to mount.

BY Ellie Stevens

In an email obtained by CNBC Wednesday, Tesla CEO Elon Musk informed staffers that the severance packages sent to some of the 14,000 workers laid off this week were “incorrectly low.”

Musk apologized for the mistake, stating that the problem is being “corrected immediately.” 

This week’s layoffs came as the company prepares for “its next phase of growth,” Musk stated in an email Sunday, citing the need to cut costs and increase productivity. Additionally, the EV maker continues to face rising competition from domestic manufacturers in China and a decrease in sales. 

The timing of the incorrect severance packages is ironic, to say the least, as the company published a proxy filing just hours before on Wednesday, asking shareholders to reapprove Musk’s astonishing pay package of $56 billion. Delaware courts characterized that number as “an unfathomable sum” when the state voided his pay package earlier this year.

Tesla board chair Robyn Denholm wrote to shareholders in the proxy filing, “Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped to generate significant growth and stockholder value.” She noted that the majority of shareholders agreed to approve this package in 2018. 

Fast Company reached out to Tesla for comment and will update this post if we hear back.

Meanwhile, Tesla stock continues to slump, flirting with 52-week lows on Thursday as shares fell 2.6% to $151.41 in morning trading. That follows a downgrade from an analyst at Deutsche Bank, who cited Tesla’s reported focus on a robotaxi program over the development of a more affordable electric vehicle, as Investor’s Business Daily reported.

The company also published its first vehicle delivery decline in four years, as overall EV sales continue to fall. 

While in the past, Tesla’s success has given Musk license to do as he pleases—pocket massive pay packages, exhibit erratic behavior on X, and launch problematic products such as the Cybertruck—increasing trouble at Tesla could ultimately lead to consequences for his behavior and numerous side hustles (which include running five other companies). 

Tesla’s next earnings report is set for April 23 and may provide insight into what is next for the company and Musk.

More trouble for Tesla: Layoffs, severance snafu, and a painful stock downgrade



Ellie Stevens is an Editorial Resident at Fast Company and an undergraduate at Northwestern University. 

Fast Company