Elon Musk-owned electric vehicle maker Tesla is planning layoffs over 10% of its global workforce. Tesla global layoff is citing duplication of roles as the reason behind the job cuts. If the decision applies companywide, it would lead to over 14,000 employees being laid off at Tesla. The plan to layoff at Tesla was announced by CEO Elon Musk according to a memo sent to employees by him.
Tesla global layoffs
“As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” Musk said in the memo.
“As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally,” the memo said.
The memo was first reported by Electrek.
Tesla had 140,473 employees as of December 2023.
Tesla shares dip
Tesla shares have taken a bruising in recent months, falling 31% year to date. While electric vehicle sales are still gaining popularity worldwide, their sales growth rate has slowed especially for Tesla. The company now faces more competition than ever.
Competition from China
To end 2023, China’s BYD temporarily dethroned Tesla as the world’s top EV maker. Chinese smartphone company Xiaomi in March said it would sell its first electric car for far less than Tesla’s Model 3.
Musk has previously recognized that China, home to a large Tesla factory, may also house the company’s strongest competition. “There’s a lot of people who are out there who think that the top 10 car companies are going to be Tesla followed by nine Chinese car companies. I think they might not be wrong,” Musk said in November.
Some would-be Tesla customers are now skipping the brand owing to Musk’s incendiary rhetoric.
Tesla delivery decline
Earlier this month, Tesla reported its first annual decline in vehicle deliveries since 2020, when the Covid-19 pandemic disrupted production extraneous of demand first-quarter deliveries fell by 8.5% on the year to 386,810 in the first quarter, with output down 1.7% from a year earlier and 12.5% sequentially despite discounts and incentives offered to customers throughout the quarter.
Decline in volume growth
But the squeeze on the company’s operating margin which came in at 8.2% in the fourth quarter, down from 16% a year earlier remains, and Tesla has warned investors to brace that vehicle volume growth this year “may be notably lower” than the rate logged in 2023, saying it is “currently between two major growth waves.”
Top management resigns
In addition to the layoffs, Tesla executives Drew Baglino and Rohan Patel announced Monday they’re leaving the company. Baglino had worked with Tesla since its early years, starting as a firmware and electrical engineer in 2006. Patel joined Tesla in 2016 after working as a senior advisor to former President Barack Obama on climate and other policy matters.
Tesla is scheduled to report first-quarter financial results on April 23.
Tesla stock update
Tesla stock closed down more than 5% on Monday.
