Billionaire entrepreneur Elon Musk has revealed plans to downsize Tesla’s global workforce by more than 10% as the demand for electric vehicles (EVs) slows.
Musk emailed Tesla employees about this decision, citing the duplication of roles and the imperative to streamline costs as primary motivations for the cuts. The memo, as reported by Bloomberg, disclosed Musk’s intention to reduce Tesla’s headcount by over 10%, potentially affecting more than 14,000 employees out of the company’s total workforce of over 140,000.
This move follows Tesla’s recent announcement of its first year-over-year sales decline, reflecting a broader deceleration in EV sales. The company has cautioned investors that its sales growth in 2024 may significantly lag behind its previous goal of achieving a 50% annual growth rate.
In his email to Tesla staff, Musk underscored the necessity of scrutinizing every aspect of the company to drive cost reductions and enhance productivity. He lamented the difficulty of implementing layoffs but emphasized their inevitability in positioning Tesla for its next phase of growth.
Musk acknowledged Tesla’s rapid expansion and the resultant duplication of roles across various functions and regions globally. Despite expressing his aversion to layoffs, Musk stressed the imperative of optimizing organizational efficiency amidst the company’s evolving trajectory.
Reports indicate that Tesla employees have been apprehensive about potential job cuts since early this year, particularly following directives for managers to evaluate the necessity of each employee’s role. Additionally, certain salaried employees were informed last year that the company would not be granting merit-based equity awards as part of annual performance evaluations.
This reduction in Tesla’s workforce marks the latest significant downsizing, following a similar move in mid-2022 when approximately 10% of salaried workers were laid off.
Despite shipping a record 1.8 million EVs in 2023, Tesla grappled with pricing adjustments on its flagship models amid challenges posed by high-interest rates and heightened global competition. The company also reportedly shelved plans for a lower-cost EV, opting instead to focus on developing a platform for an alleged robotaxi set to debut on August 8th, 2024.
