Tesla laying off more than 10% of staff globally as sales fall
BERLIN, (Reuters) - Tesla TSLA.O is laying off more than 10% of its global workforce, an internal memo seen by Reuters yesterday shows, as it grapples with falling sales and an intensifying price war for electric vehicles (EVs).
"About every five years, we need to reorganize and streamline the company for the next phase of growth," CEO Elon Musk commented in a post on X. Two senior leaders, battery development chief Drew Baglino and vice president for public policy Rohan Patel, also announced their departures, drawing posts of thanks from Musk although some investors were concerned.
Musk last announced a round of job cuts in 2022, after telling executives he had a "super bad feeling" about the economy. Still, Tesla headcount has risen from around 100,000 in late 2021 to over 140,000 in late 2023, according to filings with U.S. regulators.
Baglino was a Tesla veteran and one of four members, along with Musk, of the leadership team listed on the company's investor relations website.
Scott Acheychek, CEO of Rex Shares - which manages ETFs with high exposure to Tesla stock described the headcount reductions as strategic, but Michael Ashley
Schulman, chief investment officer at Running Point Capital Advisors, deemed the departures of the senior executives as "the larger negative signal today" that Tesla's growth was in trouble.
Less than a year ago, Tesla's chief financial officer, Zach Kirkhorn, left the company, fueling concerns about succession planning.
Tesla shares closed 5.6% lower at $161.48 on Monday. Shares of EV makers Rivian Automotive RIVN.O, Lucid Group LCID.O and VinFast Auto VFS.O also dropped between 2.4% and 9.4%.
"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 said in the memo sent to all staff.
"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% globally," it said.
Reuters saw an email sent to at least three U.S. employees notifying them their dismissal was effective immediately.
Tesla did not immediately respond to a request for comment.