Tesla Inc. will reduce its global workforce by more than 10%, Electrek said reportedas the carmaker struggles with a decline in demand for electric vehicles.
Elon Musk cited “duplicate roles and work functions in certain areas” as the reason for the cuts, Electrek said, citing an email from the CEO to staff. Assuming the cuts are company-wide, the layoffs would amount to more than 14,000 employees.
Tesla reported disastrous vehicle deliveries earlier this month, falling far short of expectations wide edge and posted its first quarterly decline in four years. Several analysts believe the electric vehicle maker’s sales may decline shrink for the year, citing slow production of its latest model – the Cybertruck — and a lull in new products until the company begins producing a next-generation vehicle late next year.
“As we prepare the company for our next phase of growth, it is critically important to examine every aspect of the company with a view to reducing costs and improving productivity,” Musk wrote in the email. “As part of these efforts, we conducted a thorough review of the organization and made the difficult decision to reduce our global workforce by more than 10%. There’s nothing I hate more, but it has to be done.”
Tesla ended last year with 140,473 employees, almost double the number three years earlier. It has increased production at two plants – one in Austin and the other outside Berlin – that began producing Model Y sport utility vehicles in early 2022. The company was founded drastic price cuts across the product range as these facilities achieved higher volumes.
Tesla shares have fallen 31% this year, making them among the worst performers in the S&P 500 Index. The stock fell as much as 1.2% before the start of regular trading on Monday.
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Tesla employees have feared possible job cuts since earlier this year, when managers were asked to confirm whether all of their employees’ positions were eligible critical. Some employees were also told late last year that the company would not offer performance-based programs Stock bonuses as part of annual performance reviews.
“We just have to raise every penny we can,” Chief Financial Officer Vaibhav Taneja said during Tesla’s most recent earnings call on Jan. 24. “We have a strong team that is very focused on this.”
The slowdown in electric mobility that Tesla has experienced recently has been widespread. China’s BYD Co. delivered just 300,114 battery-electric vehicles in the first quarter, 43% fewer than in the final three months of last year, when the company briefly led the world Top electric vehicle sellers. Manufacturer incl Volkswagen AG, General Motors Co. and Ford engine Co. have delayed, called back or completely scrapped Electric car projects that consumers shy away from still high prices and a lack of Charging stations.
In its recent major downsizing, Tesla eliminated around 10% of employees in mid-2022.