Tesla To Slash Over 10% Of Its Workforce As EV Slowdown Hits

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Tesla will trim its global workforce by over 10% in response to the significant shifts in the EV marketplace. In an internal email circulated to Tesla employees and subsequently surfaced online, Elon Musk outlined the rationale behind the “difficult decision” to downsize the workforce as the company gears up for “the next phase of growth.”

According to Tesla’s boss, the layoffs are a strategic move aimed at “cost reductions and increasing productivity.” Musk’s email further states, “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.”

More: China Funneling Billions Into BYD To Crush Tesla And Other EV Makers

Interestingly, the email makes no mention of the slowdown in global EV growth. Instead, the CEO attributes the layoffs to a “duplication of roles and job functions in certain areas,” which arose due to Tesla’s rapid growth in recent years.

While the exact number of Tesla workers facing job loss remains unknown, a 10 percent reduction in its global headcount could impact over 14,000 individuals. Bloomberg notes that Tesla employed 140,473 workers at the end of 2023, nearly double the number from 2020.

During this period, new factories facilitated the automaker’s increased production of the popular Model Y. However, heightened supply, coupled with a decline in EV demand, eventually prompted price reductions as Tesla aimed to remain competitive against its Chinese counterparts.

Tesla recently posted its first quarterly decline in four years, delivering 386,810 vehicles in Q1 2024, marking an 8.5% decrease compared to Q1 2023 and falling below analyst forecasts. Despite reclaiming the top spot in EV sales from BYD, the company could face a sluggish 2024 compared to the previous year due to an industry-wide slowdown in EV growth. Tesla shares have depreciated by 31% this year, with a further 1.2% decline recorded in pre-market trading earlier today.

The layoffs at Tesla didn’t come as a surprise to employees, as managers were instructed to compile lists of names earlier this year. This move echoes a similar instance in mid-2022 when Tesla underwent a significant reduction in its salaried workforce, resulting in a 10% decrease.

You can read Elon Musk’s entire email to the Tesla workforce below:

“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.

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. This will enable us to be lean, innovative and hungry for the next growth phase cycle.

I would like to thank everyone who is departing Tesla for their hard work over the years. I’m deeply grateful for your many contributions to our mission and we wish you well in your future opportunities. It is very difficult to say goodbye.

For those remaining, I would like to thank you in advance for the difficult job that remains ahead. We are developing some of the most revolutionary technologies in auto, energy and artificial intelligence. As we prepare the company for the next phase of growth, your resolve will make a huge difference in getting us there.

Thanks,

Elon. “