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What just happened? Tesla is joining the long list of companies that are laying off a substantial portion of their employees. The EV giant is eliminating more than 10% of its global workforce, which means at least 14,000 workers will be pushed out.
Tesla boss Elon Musk gave workers the bad news in an internal memo sent over the weekend. “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. 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,” the billionaire wrote in a memo, first reported by Electrek.
Several outlets reported that the layoffs were coming before Musk made them official. Bloomberg reports that Tesla had told managers to identify critical team members. Managers were also told not to give stock-based compensation to employees as part of their annual performance reviews, which were temporarily delayed. Moreover, the company’s stock declined on the back of reports that production at the Shanghai Gigafactory had been reduced.
Tesla recorded first-quarter vehicle deliveries of 386,810 earlier this month, fewer than what analysts had been expecting. Deliveries were down 20% in Q1 compared to the previous quarter and more than 8% compared to the same quarter a year earlier, marking the automaker’s first year-over-year decline since 2020. Tesla blamed the disappointing figures on the Berlin Gigafactory arson attack by environmentalists, the production ramp up for the refreshed Model 3, and supply-chain issues stemming from conflict around the Red Sea.
Tesla had 140,473 employees globally as of December 2023. An anonymous source told Reuters that some staff in California and Texas have already been notified of layoffs.
The EV industry has been struggling recently as cost-conscious consumers shun the associated high vehicle prices and expensive repair costs in favor of traditional combustion-engine vehicles. Tesla has been cutting the price of its EVs recently as it faces increased competition from Chinese rivals selling cheaper alternatives.
Tesla’s share price fell 1.3% in pre-market trading on the back of the news. The company’s stock is down around 31% this year.
In an attempt to get more people to purchase its full self-driving tech, Tesla started offering a free trial for all owners earlier this month. Musk also instructed employees to show North American customers how to use FSD Beta before completing a delivery.
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