Tesla has joined the litany of companies that have conducted sweeping layoffs in recent times. First reported by Electrek and since corroborated by Reuters the Washington Post and the New York Times, the company is firing “more than 10 percent” of its workforce; the company had more than 140,000 employees as of December 2023. The publication saw an internal memo noting the percentage, though it didn’t state the exact number of jobs affected. A source also told Reuters that some staffers have already been notified, which indicates that the layoffs have already begun.
“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,” Tesla CEO Elon Musk reportedly wrote in the memo. “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 percent globally.”
It emerged in early February that the company asked managers which employees’ positions were essential, suggesting that layoffs were imminent. The automaker also canceled biannual performance reviews for some workers, according to Bloomberg.
Since 2020, Tesla has effectively doubled its headcount and ended 2023 with more than 140,000 employees. Although it has carried out several rounds of layoffs over the years (including dozens of workers on the Autopilot team a year ago), the company’s workforce grew by about 10 percent in 2023 alone.
During Tesla’s quarterly earnings call in January, CEO Elon Musk noted that the company was between “two major growth waves.” The first was the popularity of the Model 3 and Y. The next is a lower-cost EV that the company seems to be pinning its hopes on. That’s slated to arrive in late 2025, though Reuters suggests Tesla may be ditching that lower-cost model to focus on robotaxis. Electrek backed up Reuters’ reporting today, saying that the low-cost model was effectively postponed as Tesla is putting its resources into robotaxis instead. The site also notes that “many people involved” in the low-cost car project was laid off as part of the layoffs. Musk says that the company plans to reveal its robotaxi on August 8.
Musk had warned investors to expect “notably lower” sales growth this year, which may have prompted cost-cutting efforts to appease them. Indeed, Tesla saw a sales slump in the first three months of 2024. Deliveries dropped by eight percent year-over-year and 20 percent from the previous quarter. The company is set to report earnings and sales for the first quarter of 2024 on April 23.
Update, April 15, 4:45PM ET: This story was modified after publish to include further details from Electrek about the layoffs in relation to Tesla’s low-cost car project.
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