Billionaire Elon Musk has announced plans to lay off more than 10% of Tesla’s global workforce as demand for electric vehicles slows.
According to a Bloomberg report, Musk communicated this to staff via an email. The Tesla CEO cited duplication of roles and the need to reduce costs as reasons for the cuts in the memo seen by Bloomberg.
Tesla finished 2023 with over 140,000 employees, meaning the cuts could impact more than 14,000 people.
EV sales drop
The layoffs are coming just two weeks after Tesla announced its first year-over-year sales drop in years, amid a wider cooling of EV sales. The company has warned investors that sales growth could be “notably lower” in 2024 than its stated goal of growing 50% each year.
In the email to the company’s staff, Musk wrote:
- “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.
- “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. There is nothing I hate more, but it must be done.”
- “Over the years, we have grown rapidly with multiple factories scaling around the globe. With this rapid growth there has been duplication of roles and job functions in certain areas,” he added.
Layoff fear comes to reality
Bloomberg reported that Tesla staff have been fearing potential job cuts since early this year when managers were asked to affirm whether each of their employees’ positions is critical. Some salaried employees were also told late last year that the company wasn’t going to be offering merit-based equity awards as part of annual performance reviews.
In its most recent major workforce reduction, Tesla eliminated about 10% of salaried workers in mid-2022.
Tesla shipped a record 1.8 million EVs in 2023. But the company spent much of the year slashing prices on its most popular models in an effort to counterbalance high-interest rates and increased global competition.
Tesla reportedly dropped plans to build a lower-cost EV starting at around $25,000, opting instead to use the underlying platform being developed to power an alleged robotaxi that Musk said will debut on August 8th, 2024.
