Tesla Spent $583 Million in Employee Layoff Costs in Q2 2024

Tesla (NASDAQ:TSLA) posted its SEC Form 10-Q for the second quarter of 2024 on its investor relations website. The document, which provides a comprehensive unaudited report on Tesla’s financial performance during the second quarter, provided important context on some of the electric vehicle maker’s results. This included the $622 million restructuring costs that the electric vehicle maker listed in its second quarter 2024 update letter.

Tesla said in its Q2 2024 update letter that its profitability and operating expenses were impacted by restructuring charges worth $622 million. Tesla watchers noted that without this one-time charge, the company’s earnings per share would have been significantly higher. To put that in context, Tesla posted non-GAAP EPS of $0.52, below the New York Stock Exchange’s expectations of $0.61 to $0.62.

The main factor in Tesla’s failure was a one-time $622 million restructuring charge. We’ll have to wait until Q10, but it will be mostly due to the Q2 headcount reduction! Without that, EPS would be 58% higher!!! pic.twitter.com/jQv9rDY6Cn

— AJ (@alojoh) July 23, 2024

Paul Marino, Chief Revenue Officer at GraniteShares, said Teslarati Tesla’s $622 million restructuring charge had a definite impact on the company’s earnings per share. “The $600 million in restructuring charges is certainly part of the earnings per share gap, and is higher than the $350 million that was disclosed and expected as part of the layoff announcement… No one should be surprised by the quarter, even if they were hoping for a surprise,” Marino said.

As Tesla’s Form 10-Q shows, the lion’s share of the $622 million in restructuring costs went to employee layoff expenses. Tesla booked $583 million in employee layoff expenses in the second quarter, which were likely triggered by CEO Elon Musk’s large-scale downsizing efforts. While Tesla is expected to save money from its restructuring, the company’s Form 10-Q suggests that laying off employees is quite costly.

10Q is out

Of the $622 million in restructuring expenses, $583 million was spent on layoffs. pic.twitter.com/xYEuY8mF4e

— Ale𝕏andra Merz (@TeslaBoomerMama) July 24, 2024

“In the second quarter of 2024, we initiated and substantially completed certain restructuring actions aimed at reducing costs and improving efficiency. As a result, we recorded $583 million of employee severance costs in Restructuring and other on our consolidated statement of operations. These expenses were substantially settled during the quarter, with the remaining unpaid non-material provisions recorded in accrued liabilities and other on our consolidated balance sheet as of June 30, 2024,” Tesla wrote in its Form 10-Q.

Tesla CFO Vaibhav Taneja addressed the electric vehicle maker’s restructuring costs during his remarks on its Q2 2024 earnings call. “The impact of our recent reorganization is reflected in restructuring and other items on the income statement. To be precise, it was a charge of approximately $622 million, which was recorded in the period. And I want people to remember that we announced that separately in the financial statements,” Taneja said, though he also noted that Tesla returned to $1.3 billion in free cash flow in the second quarter “despite the restructuring payments made during the quarter, and we ended the quarter with over $30 billion in cash and investments.”

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