Tesla to lay off more than 10% of workforce

Latest sign of trouble for EV company comes amid sales declines driven by rising competition, Musk’s behavior

Signs of turmoil at Tesla multiplied Monday after the electric car company told employees it would lay off more than 10% of the workforce to cut costs and two senior executives resigned.

The job cuts, amounting to about 14,000 people, come as the company faces increasing competition and declining sales. The management changes and layoffs are a reminder of the unpredictability of CEO Elon Musk at a critical time for the company.

Musk has not outlined a plan to reverse a decline in car sales, and he appears focused on long-shot ventures such as a self-driving taxi, rather than new models that would help Tesla compete with cars being introduced by established carmakers and new rivals from China.

“As we prepare the company for the next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” Musk told employees in a Monday morning email, a copy of which was reviewed by The New York Times.

“There is nothing I hate more, but it must be done,” he wrote.

Hours after that email, Drew Baglino, a senior vice president who has played a big role in the company’s rise from startup to dominant electric carmaker, said he had resigned.

Investors often welcome job cuts because they can lead to higher profits. But that was not the case Monday, with Tesla shares ending the day down more than 5%.

Musk did not indicate where the cuts would be made. Many of Tesla’s workers are based at four large car factories in Fremont, Calif.; Austin, Texas; and Shanghai and near Berlin. Tesla also has a factory in Buffalo, N.Y., that produces charging equipment and a factory near Reno, Nev., that makes batteries.

The layoffs may help the United Auto Workers union’s efforts to organize Tesla employees in the United States. The company’s workers may be more open to the union if they believe that representation would give them greater job security. Workers at a Volkswagen factory in Tennessee will vote this week on joining the UAW, and Mercedes-Benz workers in Alabama will vote next month.

Musk’s many other ventures, and his penchant for making polarizing political statements, have raised questions about his focus on managing Tesla. Wall Street is increasingly concerned about the company: Tesla’s share price has lost about one-third of its value this year.