Tesla is laying off more than 10% of its 140,000 employees worldwide.
Another illustration of the consequences of increased competition and weaker demand in the electric car business is the layoffs at the company, which had increased its total headcount by around 100% since the end of 2020.
Elon Musk, the CEO, allegedly informed employees via email over the weekend that layoffs were necessary due to “cost reductions and increasing productivity,” as reported by Reuters. The EV demand dropped and Tesla sales were ignored.
He informed Tesla employees in an email that, after a thorough evaluation, the company has decided to cut its headcount by more than 10% worldwide. After Electrek—an EV news site—reported the email, Reuters followed suit.
In response to comments about the layoffs and the departure of two high-ranking Tesla executives, Rohan Patel and Drew Baglino, Musk wrote on Monday on X: “About every 5 years, we need to reorganize and streamline the company for the next phase of growth.”
For the first time since the pandemic’s peak four years ago, Tesla has announced a year-over-year reduction in sales for the first quarter of this year. For a short while in the fourth quarter, BYD, a Chinese automaker, surpassed Tesla as the world leader in electric vehicle sales. Its sales dropped in the first quarter, but it still managed to reclaim the lead in electric vehicle sales from BYD.
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EV Market Grows Slower Than Expected Despite Production Slowdown
General Motors and Ford aren’t the only car companies that have reduced EV production in response to lower-than-expected demand. Overall, the electric vehicle market is expanding, but at a slower rate than expected. Topping one million units, sales of electric vehicles in the United States increased by 40% in 2017.
Tesla opened Texas and Germany factories in 2022. Last year, the company revealed intentions to build a plant in Mexico. Its headcount growth, however, has been significantly slower as of late.
According to company records, the company’s global workforce levels reached 140,473 at the end of last year, following a 40% increase in 2021 and a 29% increase in 2022. In 2023, the company reported slightly under a 10% employee gain.
Cuts to Tesla’s workforce have happened before. A statement published on their website in 2019 revealed a 7% reduction in personnel. Additionally, in 2022, it kept hiring hourly workers while cutting almost 10% of its paid staff.
At the time, Musk made a public announcement that confirmed the cuts for 2022. However, he and Tesla have refrained from officially confirming these most recent layoffs. There was no response from Tesla regarding the report or confirmation of the email because the company does not employ a public relations team.
In early trading on Monday, Tesla shares plunged another 3% on the news of job cuts; the company’s share price had already dropped 31% this year up until Friday’s end.
