Tesla will slash 10% of global workforce
Tesla, facing increasing competition and declining sales of its electric vehicles, said on Monday that it would lay off more than 10 percent of its global workforce to cut costs.
On Monday, two of Tesla’s senior executives, Drew Baglino and Rohan Patel, also announced their departures. Baglino was a senior vice-president, while Patel managed policy and business development. They shared the news on social media platform X.
“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,” Tesla CEO Elon Musk said in a memo sent to all employees, according to media reports.
“As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our head count by more than 10 percent globally.”
Tesla had more than 140,000 employees globally at the end of last year. The reduction is likely to affect at least 14,000 workers.
The Chinese car companies are extremely competitive.”
Elon Musk, Tesla CEO
Tesla shares have endured a significant decline in recent months, plummeting by more than 33 percent this year as of April 4, according to Reuters.
Despite growth in the global electric vehicle market, sales growth for Tesla has decreased.
Tesla reported a decline in sales this month. The company said it delivered 387,000 cars worldwide, down 8.5 percent from the year before. It was the first time Tesla’s quarterly sales had fallen on a year-over-year basis since the start of the COVID-19 pandemic.
The company slashed prices last year to increase demand, which has reduced the profit Tesla makes on each car. Tesla will announce its financial results for the first quarter next week.
Fifth major layoff
Monday’s layoffs were the fifth major one since 2017, when the company laid off 2 percent of its workforce. Musk last announced a round of job cuts in 2022 as he conveyed concerns about the state of the economy to company executives.
The company now faces more competition in the electric vehicle market than it did previously.
Last year, China’s BYD outpaced Tesla for the second year in a row, producing more than 3 million new energy vehicles and becoming the world’s largest electric vehicle seller, while Tesla made 1.84 million cars.
Chinese smartphone maker Xiaomi launched its first electric car, the SU7, last month. Xiaomi CEO Lei Jun said the SU7 outperforms the Tesla Model 3 in more than 90 percent of specifications, with the exception of two areas where he said Xiaomi may need three to five years to catch up with Tesla. The SU7 is approximately $4,000 cheaper than a Tesla of similar specifications.
Musk has previously recognized that China is Tesla’s biggest rival in the EV area. “The Chinese car companies are extremely competitive. China is super good at manufacturing, and the work ethic is incredible,” Musk said in November.
“There’s a lot of people who are out there who think that the top 10 car companies are going to be Tesla followed by nine Chinese car companies. I think they might not be wrong.”