Tesla will lay off ‘more than 10 per cent’ of its global workforce as demands for its electric vehicles starts to falter in a highly competitive market.
CEO Elon Musk sent a company-wide email over the weekend announcing the layoffs, tech publication Electrek reported on Monday.
Musk, in the internal memo, said the ‘difficult decision’ to reduce staff will ‘enable us to be lean, innovative and hungry for the next growth phase cycle’.
‘There is nothing I hate more, but it must be done,’ the billionaire said, as cited in the memo, before thanking ‘everyone who is departing Tesla for their hard work over the years’.
The mass layoffs, which are rumored to impact as much as 20 per cent of the company’s workforce, come after Tesla over the last few months asked managers to identify critical team members, paused some stock rewards and canceled some employees’ annual reviews, according to the report.
The world’s largest automaker by market value had 140,473 employees globally as of December 2023, according to its latest annual report. The reported cuts will affect about 15,000 workers.
Tesla had previously laid off 4 per cent of its workforce in New York in February last year as part of a performance review cycle and before a union campaign was to be launched by its employees.
‘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,’ Electrek reported, citing Musk’s statement in the internal memo.
‘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 per cent globally.’
Musk went on to thank those who were being let go, saying he was ‘deeply grateful for your many contributions to our mission’ and that the company ‘wishes you well in your future opportunities’.
He then turned to the remaining staff and thanked them in advance for the ‘difficult job that remains ahead’ as the firm works to keep ‘developing some of the most revolutionary technologies in auto, energy and artificial intelligence’.
Tesla did not immediately respond to DailyMail.com’s request for comment.
Tesla, which is set to report its quarterly earnings on April 23, reported a decline in vehicle deliveries in the first quarter, its first in nearly four years and also below market expectations.
Meanwhile, the company has scrapped plans to produce an inexpensive car, abandoning one of Musk’s longstanding goals to make affordable EVs for the masses.
Tesla shares were down 0.3 per cent in premarket trading on Monday.
After years of rapid sales growth that helped turn Tesla into the world’s most valuable automaker, the company is bracing for a slowdown in 2024.
The EV maker has been slow to refresh its aging models as high interest rates have sapped consumer appetite for big-ticket items, while rivals in China, the world’s largest auto market, are rolling out cheaper models.
The company is looking to shore up its margins, which have been dented by repeated price cuts.
It recorded a gross profit margin of 17.6 per cent in the fourth quarter, the lowest in more than four years.
