Tesla has announced a reduction of over 10% in its global workforce through an internal company email.
Rumors about the impending layoffs emerged from various sources, suggesting that the layoffs could reach up to 20% of Tesla. Moreover, it was rumored that Tesla would reduce Cybertruck production shifts at Gigafactory Texas, despite Elon Musk’s recent statement that Cybertruck production was limited by supply.
These rumors have now been substantiated, albeit with a lower percentage, in an email sent by Musk, which was leaked shortly after. The email reads:
“As Tesla has rapidly expanded with factories worldwide, we’ve seen redundancy in certain roles. As we gear up for the next growth phase, we’re focusing on cost-saving and efficiency. Consequently, we’ve decided to reduce our workforce by more than 10%. This is a tough decision, but it will help us remain agile and innovative for the future.”
The layoffs imply that at least 14,000 employees will be affected, considering Tesla’s total workforce is around 140,000. Notably, Tesla’s headcount growth has slowed recently.
It’s unclear which teams will be most affected by these layoffs. However, two prominent Tesla executives, Drew Baglino and Rohan Patel, no longer have the “Tesla-affiliated” badge on Twitter.
Baglino, previously listed as Senior VP of Powertrain and Energy, was removed from Tesla’s website after the email. Patel, Tesla’s Policy chair and unofficial PR representative on Twitter, has also been affected.
These layoffs come after a disappointing quarterly delivery report for Tesla, which saw a decline in sales, particularly in China, where local EV manufacturers are expanding rapidly.
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Tesla is expected to report its quarterly profits next Tuesday, with analysts estimating a profit of around 50 cents per share, down from 85 cents per share in Q1 2023.
Previous guidance from Tesla suggested a growth “pause” until the release of next-generation vehicles like the $25,000 Model 2. However, recent reports indicate Elon Musk may shift focus towards a robotaxi model, which he denied shortly before announcing a robotaxi unveiling event.
Tesla’s layoffs coincide with a trend of tech companies reducing staff, even as industry profits remain high.
One criticism of Tesla has been its lean workforce, which can lead to oversights and employee burnout. While Tesla’s startup mentality has been instrumental in its success, as it continues to grow, it needs to establish more robust processes and ensure employee well-being.
These layoffs, while driven by sales decline, may further impact employee morale. As Tesla continues to innovate and lead the transition to EVs, maintaining high employee morale will be crucial.
In conclusion, Tesla’s role in advancing the EV industry is undeniable, and a healthy, motivated workforce is essential for its continued success.