Tesla, the electric car company led by Elon Musk, recently announced layoffs that hit high performers and resulted in some departments being slashed by 20%. The news was confirmed by a source familiar with the matter, who spoke to TechCrunch.
According to the source, Tesla management informed employees that the layoffs were primarily due to poor financial performance, ahead of the company’s first-quarter earnings report. The company has been facing challenges with narrowing profit margins, a result of an electric vehicle price war that has been ongoing for over a year. Despite delivering a record 1.81 million vehicles in 2023, repeated price cuts to boost sales and compete with other companies have taken a toll on Tesla’s margins.
The layoffs affected more than 10% of Tesla’s global organization, which has operations in the United States, Europe, and China. In total, around 14,000 employees were let go across all departments and seniority levels. CEO Elon Musk sent an internal email to employees, stating that the cuts were made to reduce costs and increase productivity in preparation for the company’s “next phase of growth.”
Unfortunately, the layoffs included many high-performing employees, according to multiple sources who spoke to TechCrunch on the condition of anonymity. One source expressed shock at the number of talented individuals who were let go, and noted that some of those affected were working on projects that have now fallen lower on Tesla’s priority list. The source did not specify which projects were impacted.
The layoffs extended beyond the 10% mentioned in Musk’s email, with one manager reporting that 20% of their team was cut. “I lost 20% of my team, including some really good players,” the manager said.
These layoffs come as Musk continues to push Tesla towards developing fully self-driving cars. The company recently announced that they would not be producing a lower-cost electric vehicle, as originally planned, and instead focus on an alleged “robotaxi” set to debut in August.
In addition to the layoffs, two high-profile executives also left the company: Drew Baglino, Tesla’s Senior Vice President of Powertrain and Energy, and Rohan Patel, Vice President of Public Policy and Business Development.
Two high-profile executives — Drew Baglino, Tesla’s SVP of Powertrain and Energy, and Rohan Patel, VP of Public Policy and Business Development — also left the company.
Patel told TechCrunch that he made the decision to leave, citing “big overall changes” at the company. He had been actively engaging with Tesla customers and fans on social media, but declined to provide specific reasons for his departure. In a message, Patel stated that “change is good” and that Tesla will become even stronger.
Baglino, who had been with Tesla for 18 years, also expressed his reason for leaving in a message to TechCrunch. “I feel good about the impact I’ve been able to achieve, my leadership team is strong, the energy businesses I’m responsible for are doing well, etc.,” he wrote.
Some experts believe that Baglino’s departure may be due to the lack of sustainable innovation at Tesla, specifically in the power and battery divisions. “Baglino was in charge of powerdrives and new battery projects, and there’s a sense that there isn’t a whole lot of innovation that’s sustainable at this point, which is probably why Baglino is leaving,” Sandeep Rao, head of research at London-based financial services company Leverage Shares, theorized in an interview with TechCrunch.
In January, Musk announced on social media that he plans to have around 25% voting control of Tesla in order to focus on the company’s growth and become a leader in AI and robotics. Baglino’s departure is just the latest in a series of high-profile executive exits in recent months, including the previous CFO, Zachary Kirkhorn.
With these recent shakeups and layoffs, it remains to be seen what direction Tesla will take in the future.
