According to an internal email sent out by CEO Elon Musk, Tesla is implementing a significant layoff of employees in hopes of cutting costs and increasing productivity. Reports from Electrek and Bloomberg News confirm the automaker’s plans to reduce “more than 10%” of its global workforce, which currently stands at over 140,000 employees. This means that the cuts could potentially affect more than 14,000 individuals.
The decision to layoff employees comes on the heels of Tesla’s first year-over-year decline in sales in three years. This decline is in line with the overall cooling of demand for electric vehicles. Investors were previously warned by the company that sales growth may significantly decrease in 2024, compared to their stated goal of 50% growth each year. Additionally, Tesla is currently in between product cycles, with the expensive Cybertruck having just recently entered production and the popular Model Y in its fourth year without any significant updates.
In the email to employees, Musk stated, “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.” He acknowledges that the company’s growth has led to duplicate roles and job functions in certain areas. As a result, a “thorough review of the organization” has been conducted and the difficult decision to reduce the workforce by more than 10% has been made. Musk expressed his dislike for this action, but stated it must be done in order for the company to remain “lean, innovative, and hungry for the next growth phase.”
Despite the challenges, Tesla managed to ship a record 1.8 million electric vehicles in 2023. However, the company also faced financial struggles and was forced to lower the prices of their most popular models in response to high interest rates and increased competition in the global market. In addition, plans for a lower-cost electric vehicle starting at around $25,000 have reportedly been dropped or delayed. Instead, Tesla will focus on developing a platform for an alleged robotaxi that Musk claims will be unveiled on August 8.
