Read more: Tesla is losing top executives as it lays off thousands of workers
Tesla is cutting “more than 10%” of its global workforce following an abysmal first fiscal quarter that saw the electric vehicle maker fall far short of Wall Street’s sales expectations, CEO Elon Musk said in a memo to staff.
Austin, Texas-based Tesla has been rumored to be planning layoffs for months as it slashed production at its factory in China and paused some stock rewards. Elektrek and Business Insider reported over the weekend that employees had heard about planned layoffs affecting as much as 20% of Tesla’s staffing. Workers on the online forum Blind had also discussed possible layoffs.
Musk has now told workers that more than 10% of workers will lose their jobs, or at least 14,000 of Tesla’s 140,000 total employees, according to the leaked memo. Musk cited a “duplication of roles and job functions in certain areas” that sprung up as the EV maker expanded.
“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,” Musk said. “There is nothing I hate more, but it must be done. This will enable us to be lean, innovative and hungry for the next growth phase cycle.”
One of Tesla’s top leaders also resigned on Sunday as the company began the layoffs.
Tesla stock sank 5.6% in Monday trading to close at $161.48 per share. The shares have fallen about 35% this year, making Tesla one of the worst performers in the S&P 500.
The layoffs come after Tesla delivered just 386,810 EVs over the first three months of 2023, well below Wall Street’s expectations. In recent months, analysts have repeatedly cut their price targets for Tesla stock. Wells Fargo’s Colin Langan told investors last month that Tesla is a “growth company with no growth.” And as the pace of EV sales growth continues to slow, Deutsche Bank analysts have said Tesla is facing a “serious demand issue.”
In January, Musk told investors that Tesla is “currently between two major growth waves” and warned of a sales slowdown in 2024. On Monday, Musk wrote on X that Tesla needs to “reorganize and streamline the company for the next phase of growth” every five years.
Business Insider, citing an internal message to employees, reports that Tesla employees working on the Cybertruck electric pickup will move to shorter shifts as of Monday. Those workers will now work 11-hour shifts during the day and 10.5-hour shifts at night, down from 12-hour shifts. Tesla has delayed or canceled several deliveries of the Cybertruck over a serious problem with the EV’s accelerator pedal, which can lead to unintended acceleration issues, Jalopnik reports.
Ahead of a planned union organizing push in Buffalo, New York, last year, Tesla laid off dozens of employees. In June 2022, the company slashed about 10% of its workforce, or roughly 10,000 employees.
With this latest round of job cuts, Tesla joins the dozens of other tech companies laying off workers in 2024. About 60,000 tech workers have lost their jobs this year, according to industry tracker layoffs.fyi.
Tesla reports its full first-quarter earnings results on April 23.