Elon Musk’s company reported disastrous vehicle deliveries early this month
Bloomberg News
Tesla Inc. will slash global headcount by more than 10 per cent, Elon Musk wrote in an email to staff, as the carmaker grapples with a slowdown in electric vehicle demand.
Tesla CEO Elon Musk sent a company-wide email announcing layoffs of “more than 10%” of Tesla’s global workforce, estimated to be at least 14,000 employees. Musk cited the need to control costs and boost productivity as Tesla prepares for its next growth phase. The layoffs come after Tesla significantly missed delivery estimates in Q1 2024 and saw a rare year-over-year sales decline, mainly due to struggles in China. Analysts still estimate Tesla will turn a Q1 profit of $0.50 per share despite c
The chief executive officer cited duplication of roles and the need to reduce cost as reasons for the cuts in the memo seen by Bloomberg News. If the cuts apply companywide, the dismissal would amount to more than 14,000 employees.
Tesla reported disastrous vehicle deliveries early this month, missing expectations by a wide margin and posting its first quarterly decline in four years. Several analysts are bracing for the EV maker’s sales to potentially shrink for the year, citing slow output of its newest model — the Cybertruck — and a lull in new products until the company starts producing a next-generation vehicle late next year.
“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,” Musk wrote in the email. “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. There is nothing I hate more, but it must be done.”
Tesla ended last year with 140,473 employees, almost double its total three years earlier. It’s been ramping up output at two plants — one in Austin, and the other outside Berlin — that started cranking out Model Y sport utility vehicles in early 2022. The company started slashing prices across its lineup as those facilities reached higher volumes.
“Over the years, we have grown rapidly with multiple factories scaling around the globe,” Musk wrote in the mail, which was reported earlier Monday by the blog Electrek. “With this rapid growth there has been duplication of roles and job functions in certain areas.”
Tesla shares have slumped 31 per cent this year, ranking among the worst performers in the S&P 500 Index. The stock slipped as much as 1.2 per cent before the start of regular trading.
Tesla staff have been fearing potential job cuts since early this year, when managers were asked to affirm whether each of their employees’ positions is critical. Some salaried employees also were told late last year that the company wasn’t going to be offering merit-based equity awards as part of annual performance reviews.
“We just have to chase down every penny possible,” chief financial officer Vaibhav Taneja said during Tesla’s most recent earnings call on Jan. 24. “We have a strong team which is hyper-focused on this.”
Share This:
