TESLA ZAPS JOBS
EV maker lays off more than 10% of its staff
Tesla on Monday chopped more than 10% of its global workforce, a move CEO Elon Musk called a “difficult decision” for the company as it grapples with falling sales amid an intensifying price war for electric vehicles.
The cuts, announced in a memo sent by Musk to Tesla’s roughly 140,000 employees, could reach closer to 20% in some divisions, two people familiar with the matter told Bloomberg.
“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. “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.”
The dismissals were effective immediately, according to an email sent to laid-off employees.
‘Need to streamline’
In response to comments on Musk-owned X, the mogul posted: “About every five years, we need to reorganize and streamline the company for the next phase of growth.”
Also Monday, Drew Baglino, senior vice president in charge of battery development, and Rohan Patel, vice president for public policy and business development, both announced on X their exits from the company.
Baglino was one of four members in Tesla’s leadership team listed on the company’s investor relations website.
Musk thanked both executives for their work in a response on X.
Representatives for Tesla did not respond to a request for comment.
Tesla shares dropped 5.59% Monday, and have plunged nearly 35% since the start of the year.
Scott Acheychek, CEO of Rex Shares — which manage ETFs with high exposure to Tesla stock — described the headcount reductions as strategic, pointing to Tesla’s overall year-on-year headcount increase as a sign that the carmaker was still in a phase of growth.
Still, 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.
Musk last announced a round of job cuts in 2022, after telling executives he had a “super bad feeling” about the economy. Tesla has never outlined how many jobs it cut in 2022.
The latest layoffs come less than two weeks after the company posted its first year-over-year drop in quarterly car deliveries since 2020.
Tesla reported earlier this month that it delivered 386,810 vehicles globally in the first three months of 2024 — down more than 9% from the 422,875 vehicle sales in the first quarter of last year. The number came in well below Wall Street’s expectations of 457,000 deliveries.
The Austin, Texas-based company had produced more than 433,000 vehicles intended to be delivered during the first quarter, meaning roughly 12% of its inventory went unsold. Despite the shortfall, the results were enough for Tesla to reclaim the title of world’s top EV seller.
Tesla lost the title to BYD late last year at a time when the Chinese rival was touted for offering highervolume models that cost much less than what Tesla charges for its cheapest Model 3 sedan in China.