Business
The EV market is in trouble: The latest sign is Tesla's layoffs
Tesla is in trouble: Its product line is aging. Sales are stalling. Top executives are fleeing. The stock price is down. The first wave of new Cybertrucks is riddled with quality problems. The low-cost Model 2 recently promised by Chief Executive Elon Musk appears to be dead.
Some of Tesla’s most environmentally conscious buyers are signaling their disgust with the behavior of Musk by turning to other brands, even as price cut follows price cut. Those bargain basement deals are squeezing profit margins, though the company remains profitable and still sells more EVs than other automakers.
The company’s four auto factories have more car-making capacity than the company has customers.
The situation is so serious that on Monday, Musk announced that “more than 10%” of its global workforce would be laid off. How much more Musk did not say. Tesla did not respond to a request for comment for this article, but Musk said in an internal email explaining the layoffs that the company had to seek cost reductions and higher productivity.
If Tesla were the only electric car maker under pressure, that alone would send shivers through California policymakers, from Gov. Gavin Newsom on down, who in their quest to address climate change and air pollution have set strict mandates that will ban sales of new cars that run only on fossil fuels by 2035.
But the drive to electric vehicles has, at best, hit a rough patch, with little visibility into road conditions ahead. EV sales are still rising but at a far slower pace than the highs reached in 2022 and early 2023.
Ford, General Motors and other major automakers are pulling back on their EV ambitions, putting more of their money behind hybrid vehicles, cutting back on production, and delaying introduction of some EV models. EV startups including Rivian, Lucid and Polestar are laying off workers, as they encounter production problems or fall short of sales targets or both. The financial difficulties at Fisker, the Manhattan Beach electric vehicle startup, became so severe, its stock price so battered, that it’ll get kicked off the New York Stock Exchange on April 22, or, more formally, be “delisted.”
The big question is whether current conditions will prove to be growing pains (however agonizing) on the way to a cleaner transportation economy. And if so, how long the pain will last.
Right now EV sales growth is slowing at a time when rapid expansion is needed to reach climate goals. Across the U.S., EV sale rose only 2.6% year over year for the first quarter of 2024, while EV market share against gasoline cars declined, to 7.3%, from 2023’s 7.6% record high, according to Kelley Blue Book.
Even EV-happy California is bumping into customer resistance: In 2023, EV market share for new car sales topped 21%, far higher than any other state. While 2024 first-quarter California EV sales figures won’t be available until early May, the signs are worrisome: In the last half of 2023, new EV sales declined in California, the first negative growth ever reported.
“We’ve reached a threshold of market intolerance,” said Karl Brauer, auto industry analyst at iSeeCars.com. “The numbers of people who have a personal interest in, or a tolerance for, dealing with EV challenges, or have the means and lifestyle to work with an electric vehicle” appears to be hitting a wall, he said.
Temporary, or long term? Yet to be determined, he said.
His firm looked at EV penetration rates in states and cities and found that sales grew rapidly until market share hit about 8%, and then slowed dramatically or went nearly flat. California is an exception; new EV market share reached over 21% in 2023. Still, in the year’s last quarter, EV sales growth went negative, with Tesla new car sales down 10%.
The current problem for EV advocates: how to move the customer profile from early adopters to mainstream buyers.
More than 90% of EV buyers, Brauer’s research shows, are relatively affluent homeowners who have installed their own chargers and own two vehicles or more — meaning, in most cases, there’s a gasoline car available for long trips.
The majority of car buyers aren’t as well off, so the price difference between gasoline cars and electric cars — about $45,000 on average for gas, compared with about $55,000 for electric — is a big issue. (Even that $45,000 is high for millions of buyers, hence the strength of the used car market.)
EV drivers who live in condos or apartments must rely for the most part on public or workplace chargers.
The public charging infrastructure is notoriously unreliable, outside of Tesla’s charging network, a system the company could afford to build and maintain by maintaining a stratospheric stock price — a stock price that’s suffered mightily over the last year, down nearly 40% in the last six months.
Tesla is beginning to open up its charging network to other carmakers, in part to qualify for federal subsidies.
While EV sales growth is slowing, hybrid cars are blasting off, benefiting companies such as Toyota and Honda.
The Tesla news is reverberating through the auto world. For more than a decade, it was the EV industry. Regulators pointed to Tesla as evidence that customers would buy electric cars if the industry would craft desirable vehicles instead of the glorified golf carts they were producing, weak tea attempts at meeting government regulations. Under pressure from California and 12 other allied states, from regulators in Europe, and a burgeoning EV industry in China, automakers globally are now investing hundreds of billions in electric vehicles.
If California and the world are going to meet their lofty climate goals, policymakers and automakers, including Tesla, have a lot of work still to do.
Business
U.S. Space Force awards $1.6 billion in contracts to South Bay satellite builders
The U.S. Space Force announced Friday it has awarded satellite contracts with a combined value of about $1.6 billion to Rocket Lab in Long Beach and to the Redondo Beach Space Park campus of Northrop Grumman.
The contracts by the Space Development Agency will fund the construction by each company of 18 satellites for a network in development that will provide warning of advanced threats such as hypersonic missiles.
Northrop Grumman has been awarded contracts for prior phases of the Proliferated Warfighter Space Architecture, a planned network of missile defense and communications satellites in low Earth orbit.
The contract announced Friday is valued at $764 million, and the company is now set to deliver a total of 150 satellites for the network.
The $805-million contract awarded to Rocket Lab is its largest to date. It had previously been awarded a $515 million contract to deliver 18 communications satellites for the network.
Founded in 2006 in New Zealand, the company builds satellites and provides small-satellite launch services for commercial and government customers with its Electron rocket. It moved to Long Beach in 2020 from Huntington Beach and is developing a larger rocket.
“This is more than just a contract. It’s a resounding affirmation of our evolution from simply a trusted launch provider to a leading vertically integrated space prime contractor,” said Rocket Labs founder and chief executive Peter Beck in online remarks.
The company said it could eventually earn up to $1 billion due to the contract by supplying components to other builders of the satellite network.
Also awarded contracts announced Friday were a Lockheed Martin group in Sunnyvalle, Calif., and L3Harris Technologies of Fort Wayne, Ind. Those contracts for 36 satellites were valued at nearly $2 billion.
Gurpartap “GP” Sandhoo, acting director of the Space Development Agency, said the contracts awarded “will achieve near-continuous global coverage for missile warning and tracking” in addition to other capabilities.
Northrop Grumman said the missiles are being built to respond to the rise of hypersonic missiles, which maneuver in flight and require infrared tracking and speedy data transmission to protect U.S. troops.
Beck said that the contracts reflects Rocket Labs growth into an “industry disruptor” and growing space prime contractor.
Business
California-based company recalls thousands of cases of salad dressing over ‘foreign objects’
A California food manufacturer is recalling thousands of cases of salad dressing distributed to major retailers over potential contamination from “foreign objects.”
The company, Irvine-based Ventura Foods, recalled 3,556 cases of the dressing that could be contaminated by “black plastic planting material” in the granulated onion used, according to an alert issued by the U.S. Food and Drug Administration.
Ventura Foods voluntarily initiated the recall of the product, which was sold at Costco, Publix and several other retailers across 27 states, according to the FDA.
None of the 42 locations where the product was sold were in California.
Ventura Foods said it issued the recall after one of its ingredient suppliers recalled a batch of onion granules that the company had used n some of its dressings.
“Upon receiving notice of the supplier’s recall, we acted with urgency to remove all potentially impacted product from the marketplace. This includes urging our customers, their distributors and retailers to review their inventory, segregate and stop the further sale and distribution of any products subject to the recall,” said company spokesperson Eniko Bolivar-Murphy in an emailed statement. “The safety of our products is and will always be our top priority.”
The FDA issued its initial recall alert in early November. Costco also alerted customers at that time, noting that customers could return the products to stores for a full refund. The affected products had sell-by dates between Oct. 17 and Nov. 9.
The company recalled the following types of salad dressing:
- Creamy Poblano Avocado Ranch Dressing and Dip
- Ventura Caesar Dressing
- Pepper Mill Regal Caesar Dressing
- Pepper Mill Creamy Caesar Dressing
- Caesar Dressing served at Costco Service Deli
- Caesar Dressing served at Costco Food Court
- Hidden Valley, Buttermilk Ranch
Business
They graduated from Stanford. Due to AI, they can’t find a job
A Stanford software engineering degree used to be a golden ticket. Artificial intelligence has devalued it to bronze, recent graduates say.
The elite students are shocked by the lack of job offers as they finish studies at what is often ranked as the top university in America.
When they were freshmen, ChatGPT hadn’t yet been released upon the world. Today, AI can code better than most humans.
Top tech companies just don’t need as many fresh graduates.
“Stanford computer science graduates are struggling to find entry-level jobs” with the most prominent tech brands, said Jan Liphardt, associate professor of bioengineering at Stanford University. “I think that’s crazy.”
While the rapidly advancing coding capabilities of generative AI have made experienced engineers more productive, they have also hobbled the job prospects of early-career software engineers.
Stanford students describe a suddenly skewed job market, where just a small slice of graduates — those considered “cracked engineers” who already have thick resumes building products and doing research — are getting the few good jobs, leaving everyone else to fight for scraps.
“There’s definitely a very dreary mood on campus,” said a recent computer science graduate who asked not to be named so they could speak freely. “People [who are] job hunting are very stressed out, and it’s very hard for them to actually secure jobs.”
The shake-up is being felt across California colleges, including UC Berkeley, USC and others. The job search has been even tougher for those with less prestigious degrees.
Eylul Akgul graduated last year with a degree in computer science from Loyola Marymount University. She wasn’t getting offers, so she went home to Turkey and got some experience at a startup. In May, she returned to the U.S., and still, she was “ghosted” by hundreds of employers.
“The industry for programmers is getting very oversaturated,” Akgul said.
The engineers’ most significant competitor is getting stronger by the day. When ChatGPT launched in 2022, it could only code for 30 seconds at a time. Today’s AI agents can code for hours, and do basic programming faster with fewer mistakes.
Data suggests that even though AI startups like OpenAI and Anthropic are hiring many people, it is not offsetting the decline in hiring elsewhere. Employment for specific groups, such as early-career software developers between the ages of 22 and 25 has declined by nearly 20% from its peak in late 2022, according to a Stanford study.
It wasn’t just software engineers, but also customer service and accounting jobs that were highly exposed to competition from AI. The Stanford study estimated that entry-level hiring for AI-exposed jobs declined 13% relative to less-exposed jobs such as nursing.
In the Los Angeles region, another study estimated that close to 200,000 jobs are exposed. Around 40% of tasks done by call center workers, editors and personal finance experts could be automated and done by AI, according to an AI Exposure Index curated by resume builder MyPerfectResume.
Many tech startups and titans have not been shy about broadcasting that they are cutting back on hiring plans as AI allows them to do more programming with fewer people.
Anthropic Chief Executive Dario Amodei said that 70% to 90% of the code for some products at his company is written by his company’s AI, called Claude. In May, he predicted that AI’s capabilities will increase until close to 50% of all entry-level white-collar jobs might be wiped out in five years.
A common sentiment from hiring managers is that where they previously needed ten engineers, they now only need “two skilled engineers and one of these LLM-based agents,” which can be just as productive, said Nenad Medvidović, a computer science professor at the University of Southern California.
“We don’t need the junior developers anymore,” said Amr Awadallah, CEO of Vectara, a Palo Alto-based AI startup. “The AI now can code better than the average junior developer that comes out of the best schools out there.”
To be sure, AI is still a long way from causing the extinction of software engineers. As AI handles structured, repetitive tasks, human engineers’ jobs are shifting toward oversight.
Today’s AIs are powerful but “jagged,” meaning they can excel at certain math problems yet still fail basic logic tests and aren’t consistent. One study found that AI tools made experienced developers 19% slower at work, as they spent more time reviewing code and fixing errors.
Students should focus on learning how to manage and check the work of AI as well as getting experience working with it, said John David N. Dionisio, a computer science professor at LMU.
Stanford students say they are arriving at the job market and finding a split in the road; capable AI engineers can find jobs, but basic, old-school computer science jobs are disappearing.
As they hit this surprise speed bump, some students are lowering their standards and joining companies they wouldn’t have considered before. Some are creating their own startups. A large group of frustrated grads are deciding to continue their studies to beef up their resumes and add more skills needed to compete with AI.
“If you look at the enrollment numbers in the past two years, they’ve skyrocketed for people wanting to do a fifth-year master’s,” the Stanford graduate said. “It’s a whole other year, a whole other cycle to do recruiting. I would say, half of my friends are still on campus doing their fifth-year master’s.”
After four months of searching, LMU graduate Akgul finally landed a technical lead job at a software consultancy in Los Angeles. At her new job, she uses AI coding tools, but she feels like she has to do the work of three developers.
Universities and students will have to rethink their curricula and majors to ensure that their four years of study prepare them for a world with AI.
“That’s been a dramatic reversal from three years ago, when all of my undergraduate mentees found great jobs at the companies around us,” Stanford’s Liphardt said. “That has changed.”
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