Tesla Announces Workforce Reduction: More Than 10% of Employees Affected.
Tesla’s announcement of layoffs affecting over 10% of its global electric vehicle workforce has drawn attention to the challenges facing the world’s largest auto maker by market value. In a memo reportedly sent to staff and first reported by news website Electrek, billionaire owner Elon Musk acknowledged the difficulty of the decision but emphasized its necessity for the company’s future.
The move comes amidst a broader review of Tesla’s organization, with Musk noting that the layoffs will enable the company to become lean, innovative, and hungry for growth. The email did not specify the exact number of employees affected, but Tesla had approximately 140,473 employees globally as of December, according to its latest annual report.
Employees notified of their layoffs reported being locked out of their emails, indicating swift action following the announcement. Additionally, senior vice president Andrew “Drew” Baglino announced his departure from Tesla after 18 years with the company, further highlighting the impact of the restructuring.
Tesla’s decision to reduce its workforce follows a decline in vehicle deliveries in the first quarter, the first decline in nearly four years and below market expectations. The company has also faced challenges such as reduced production at the Gigafactory in Shanghai and shorter shifts for Cybertruck production in Austin.
The broader context includes slowing demand for electric vehicles (EVs), impacting Tesla’s outlook. Despite reports suggesting a shift in plans, Musk has denied scrapping the goal of producing an inexpensive car, a longstanding objective aimed at making EVs more affordable.
After the announcement, Tesla’s shares were down in premarket trading, reflecting investor concerns amid the company’s restructuring efforts and broader market challenges. Factors such as aging models, high-interest rates affecting consumer demand, and competition from inexpensive EVs in China put pressure on Tesla’s performance and strategic direction.
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