Tesla plans to lay off 10% of its global workforce as demand for electric vehicles (EV) declines.
According to a Bloomberg article published on Monday, Elon Musk conveyed the downsizing to employees at the automobile company via a memo.
Musk cited duplication of duties and the necessity to save expenses as reasons for the reduction.
“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 per cent globally. There is nothing I hate more, but it must be done.”
Responding to a comment on the planned layoff on X, Musk said “about every five years, we need to reorganize and streamline the company for the next phase of growth”.
If the cuts apply companywide, the dismissal would amount to more than 14,000 employees, the publication noted.
Tesla ended 2023 with 140,473 employees, nearly double its workforce three years ago.
The decision to lay off workers comes as Tesla faces declining sales and an intensifying price war for EVs.
According to the publication, Tesla announced that vehicle deliveries early this month missed expectations by a wide margin, posting its first quarterly decline in four years.
“Several analysts are bracing for the EV maker’s sales to potentially shrink for the year, citing slow output of its newest model, the Cybertruck, and a lull in new products until the company starts producing a next-generation vehicle late next year,” the publication said.
“The EV slowdown Tesla has felt of late has been widespread. China’s BYD Co. delivered just 300,114 battery-electric vehicles in the first quarter, down 43 per cent from the final three months of last year, when it briefly pulled ahead as the world’s top EV seller.”
Manufacturers including Volkswagen AG, General Motors Co., and Ford Motor Co. have delayed, dialled back or altogether scrapped EV projects as customers protest high prices and a scarcity of charging points.
