This decision was disclosed through an internal email written by CEO Elon Musk, citing reasons aligned with strategic cost reductions and heightened productivity.
In his communication, Elon Musk stated that after a careful review, Tesla needs to eliminate duplicated roles that have developed due to rapid business expansion. He noted that this move is crucial for maintaining competitiveness amid challenging market conditions.
Musk’s email further states, “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.”
The workforce being targeted for reductions has built up substantially since 2020 when Tesla employed around half the current number. As of the end of 2023, Tesla reported a total employee count of 140,473. These layoffs are happening at a time when Tesla faces pressure due to increased production outputs and lower demand in the electric vehicle market.
According to recent data, there was an increase in Model Y production stimulated by new factory openings; however, sales tell a different story. Compared to the first quarter of 2023, Tesla saw an 8.5% decline in deliveries this quarter with 386,810 vehicles.
Tesla shares have depreciated by 31% this year, with a further 1.2% decline recorded in pre-market trading earlier today. This workforce cut follows another reduction back in mid-2022 which saw a similar scale layoff among salaried workers.
Source: Bloomberg
