In the realm of U.S. automotive giants, Tesla finds itself under a critical financial spotlight. 2023 financial disclosures have shed light on a significant gap in revenue generated per employee compared to its traditional counterparts, General Motors and Ford, in Detroit.
In the fiscal year just passed, Tesla boasted an impressive $97 billion in revenue, which, when divided among its expansive workforce of over 140,000 employees, averages to just under $690,000 per employee. However, this figure falls well short in comparison to the performance of GM and Ford.
GM’s 2023 financials indicate that each of its 163,000 employees counted for over $1 million in revenue, showcasing a substantial lead over Tesla in this metric. Similarly, Ford posted an impressive $937,000 in revenue for each of its 173,000 workers. Considering that GM and Ford continue to make such lucrative ICE pickup trucks and SUVs as they do, it comes as no surprise.
Indeed, it appears that labor does create value.
Investor jitters have been on the rise following Tesla’s cautionary statement in January regarding anticipating “notably lower” sales growth for the ongoing year. Investor apprehension is further fueled by concerns over softening demand for electric vehicles and increasing competition in a tight market.
Image copyright Manoli Katakis, Muscle Cars & Trucks.
According to Reuters, Tesla appears to be doubling down on cost optimization efforts. Reports suggest the company has begun evaluating the necessity of various roles within the organization, sparking fears of layoffs among employees.
Despite a small uptick in Tesla’s stock value this week, the company has witnessed a staggering loss of over $180 billion in market capitalization thus far in 2024. With its current valuation standing at $603 billion. Further scrutiny of Tesla’s financial health reveals concerning trends. Gross margins have contracted to their lowest levels since 2019 in the December quarter.
Worryingly, revenue growth is a sluggish 3%, marking Tesla’s slowest rate of growth in more than three years.
While Tesla’s revenue per worker has shown signs of improvement compared to the previous year, when it stood at $637,000, the company still lags behind its counterparts. GM has consistently demonstrated superior revenue generation per employee, in 2022 it’s estimated GM earned $972,258 per employee.
In parallel, major players in the tech industry have resorted to significant workforce restructuring, shedding jobs added during the pandemic era while maintaining sales growth. GM just went through its round of job shedding and voluntary employee buyouts during 2023.
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