Dive Brief:
- Tesla is cutting 10% of its global workforce amid slowing demand for its electric vehicles, according to a memo to employees from CEO Elon Musk seen by several media outlets.
- In the memo, which was first published by Electrek, Musk said there has been duplication of roles and job functions in certain areas as the company expanded globally, making it “extremely important” to reduce costs and increase productivity.
- The layoffs are significant, as Tesla’s employee count was 140,473 as of Dec 31, 2023, according to the company's annual report.
Dive Insight:
During Tesla’s earnings call with analysts in January, CEO Elon Musk warned that competition from automakers in China, including BYD which overtook Tesla as the global EV sales leader in Q4, 2023, could make it increasingly difficult for the company to compete in the EV market.
Tesla and other automakers are also dealing with higher interest rates making it more expensive for buyers to finance a vehicle. Tesla cut its vehicle prices multiple times last year in a bid to boost its market share, which impacted its margins in 2023.
However, Musk cited the company’s rapid growth in the memo, and not weakening demand for EVs.
“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,” Musk wrote. “This will enable us to be lean, innovative and hungry for the next growth phase cycle.”
In addition to the layoffs, Tesla’s Senior VP of Powertrain, Drew Baglino, has departed the company, according to a post Monday on X. Baglino joined Tesla in 2006 and has served in the job since 2019. Among his various roles during his 18-year career at Tesla, Baglino was a principal system design engineer on the Model S from July 2009 to July 2013.
“I made the difficult decision to move on from Tesla after 18 years yesterday,” Baglino wrote on X. “I am so thankful to have worked with and learned from the countless incredibly talented people at Tesla over the years.”
Tesla delivered nearly 387,000 vehicles in the first quarter of 2024, an 8.5% year-over-year decline and its lowest number since Q2, 2020 when the pandemic resulted in the shutdown of its California factory. The decline in quarterly deliveries resulted in a backlog of over 46,000 undelivered vehicles.
Tesla will post its Q1 financial results on April 23, which may shed some more light on the company’s performance and outlook for 2024.
