Tesla will cut more than 10% of its global workforce

Tesla will cut more than 10% of its global workforce

Tesla is reportedly cutting more than 10% of its global workforce of 140,000.

The cuts for the company, which have nearly doubled their total since the end of 2020, are just the latest example of the impact of more competition and weaker demand in the electric car sector.

An email sent by CEO Elon Musk to staff over the weekend linked the planned layoffs to the need for “cost reductions and increased productivity,” according to a report from Reuters. It didn’t mention anything about slowing demand for electric vehicles or about Tesla sales.

“We have conducted a thorough review of the organization and made the difficult decision to reduce our workforce by more than 10% worldwide,” he wrote in an email to Tesla employees. The email, first reported by Electrek, an EV news site, was also reported by Reuters.

On Monday, Musk posted on X: “About every 5 years, we need to realign and realign the company for the next phase of growth,” responding to a post responding to the layoffs and departures of two high-ranking Tesla executives, Drew Baglino and Rohan Patel .

Tesla just reported a year-over-year sales decline in the first three months of the year, the first such drop since the peak of the pandemic four years ago. In the fourth quarter Tesla briefly lost its title of global EV sales leader to Chinese automaker BYD. It retook the EV sales title from BYD in the first quarter, despite a decline in sales. Other automakers, including General Motors and Ford, have also pulled back production of their EVs in the face of softer-than-expected demand for the products. In general, EV sales continue to grow on an industry-wide basis but not as quickly as expected. US EV sales rose 40% last year, surpassing the 1 million mark for the first time.

Tesla is opening factories in Germany and Texas in 2022 and last year announced plans for a factory in Mexico. But growth in the number of its employees has been very slow recently.

After a 40% increase in staff in 2021, and a 29% increase in 2022, the company posted just under 10% growth in employees in 2023, according to company filings, bringing global staff levels to 140,473 at the end of last year.

This isn’t the first time Tesla has cut staff. It announced a 7% reduction in staff in 2019, in a statement posted online at the time. And cut about 10% of salaried staff even as it continues to hire hourly staff in 2022.

The 2022 cut was confirmed by a public statement from Musk at the time. But neither he nor Tesla have publicly confirmed this latest round of cuts. Tesla, which has no public relations staff, did not respond to requests for comment on the report and did not confirm the email.

Tesla shares, already down 31% so far this year through Friday’s close, fell another 3% in early trading Monday on reports of job cuts.