Tesla is laying off 10% of its employees as part of a broader effort to streamline operations amid a global downturn in demand for electric vehicles. The Edge Singapore reports that the announcement came directly from CEO Elon Musk.
Mr Musk emailed staff about the decision, citing the need to eliminate duplicate roles and lower costs. These layoffs would affect more than 14,000 employees if applied across the company.
In addition to the job cuts, two senior executives, Mr Drew Baglino and Mr Rohan Patel, have left the company. Mr Drew Baglino, an 18-year veteran at Tesla and one of only four named executive officers, resigned.
Disappointing vehicle delivery figures earlier this month highlighted Tesla’s recent struggles, marking its first quarterly decline in four years.
Analysts are concerned about the company’s sales trajectory for the year, attributing it to slow production of its latest model, the Cybertruck, and a lack of new products until the introduction of a next-generation vehicle late next year.
In the memo seen by Bloomberg News, Mr Elon Musk expressed the necessity of reviewing all aspects of the company to drive down costs and boost productivity in preparation for future growth.
He acknowledged the difficulty of the decision, stating, “There is nothing I hate more, but it must be done.”
The company’s workforce has grown substantially in recent years. Ending 2023, it had 140,473 employees, nearly double its count three years prior.
This expansion was driven by increased production at its plants in Austin and Berlin, which began manufacturing Model Y SUVs in early 2022.
According to the blog Electrek, Tesla’s move to reduce prices across its lineup coincided with the higher volumes from these facilities.
Mr Musk attributed the need for layoffs to the duplication of roles and job functions resulting from the company’s rapid growth.
This isn’t the first time Tesla has downsized its workforce; it cut about 10% of salaried workers in mid-2022.
The news of the layoffs sent Tesla’s shares down by 3.2% in early trading in New York. The stock has already fallen by 31% this year, making it one of the worst performers in the S&P 500 Index.
Employees had been anticipating potential job cuts since the beginning of the year when managers were asked to evaluate the necessity of each position. Some salaried workers were also informed last year that the company would not offer merit-based equity awards as part of annual performance reviews.
During its recent earnings call, Tesla’s Chief Financial Officer, Mr Vaibhav Taneja, emphasised the company’s focus on cost-saving measures, stating, “We just have to chase down every penny possible.“
Tesla’s experience of slowing demand in the EV market is not unique; other manufacturers like BYD Co. have also reported declines in sales.
The industry faces challenges such as high prices and a shortage of charging stations, leading companies like Volkswagen AG, General Motors Co, and Ford Motor Co. to reconsider or delay their EV projects. /TISG
Read also: Tesla investors urge Musk to focus, not rant
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