Elon Musk, the billionaire behind Tesla, has revealed a plan to lay off more than 10% of the company’s workers worldwide due to a slowdown in the demand for electric cars.
Musk informed his staff about the decision via email, as reported by Bloomberg, pointing out that there are too many similar job roles within the company, and to keep costs down, some positions will need to be cut.
With over 140,000 employees at the end of 2023, this move could affect more than 14,000 individuals.
This announcement comes shortly after Tesla reported a decrease in sales compared to the previous year, marking the first drop in several years. The electric vehicle (EV) market as a whole has been cooling down.
Tesla had previously aimed for a 50% annual growth in sales, but now, the company is cautioning investors that achieving such growth in 2024 might be challenging.
In his email to Tesla employees, Musk stated:
“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.
“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. There is nothing I hate more, but it must be done.
“Over the years, we have grown rapidly with multiple factories scaling around the globe. With this rapid growth there has been duplication of roles and job functions in certain areas,” he added.
Reports suggest that Tesla employees have been worried about possible layoffs since the beginning of the year when managers were asked to assess the necessity of each position.
Additionally, some salaried workers were informed last year that they would not receive merit-based equity awards during annual performance evaluations.
This is not the first time Tesla has reduced its workforce. In mid-2022, the company let go of about 10% of its salaried employees.
Tesla had a successful year in 2023, shipping a record 1.8 million electric vehicles.
However, the company had to lower prices on its most popular models to compete with rising interest rates and increased competition globally.
Although there were plans to develop a more affordable EV priced at around $25,000, Tesla has reportedly shifted focus to a platform for a rumoured robotaxi, expected to debut on August 8th, 2024.
