As the electric vehicle (EV) market faces growing challenges, Tesla, the world’s most valuable automaker, is reportedly preparing to lay off more than 10% of its global workforce, according to a report from Fox Business.
This move comes in response to weak first quarter deliveries and increasing competition in the industry, signaling a shift in the once-booming EV sector.
According to a leaked internal email from CEO Elon Musk, obtained by tech publication Electrek, Tesla is looking to cut costs and increase productivity after years of rapid growth.
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Musk cited duplication in some roles and functions within the company as a reason for the layoffs.
With a global workforce of approximately 140,473 employees, as reported by Reuters based on Tesla’s latest annual report, the staffing reduction is expected to affect around 15,000 workers.
The reported layoffs follow a series of cost-cutting measures implemented by Tesla, including the identification of critical team members, a pause on some stock rewards, the cancellation of certain annual reviews, and reduced production at Gigafactory Shanghai.
These actions suggest that the company is grappling with the challenges posed by a changing market landscape and the need to maintain profitability.
Breaking: CEO Elon Musk says Tesla will layoff more than 10% of its global workforce: ‘Nothing I hate more’ https://t.co/2ja2VS3R1h
— John Solomon (@jsolomonReports) April 15, 2024
Tesla’s quarterly deliveries, a key indicator of the company’s performance, declined for the first time in nearly four years, falling short of Wall Street analysts’ estimates.
The automaker delivered approximately 387,000 vehicles in the first quarter, an 8.5% decrease compared to the same period last year and well below the expected 443,000 units.
The company has also been facing increased competition in China, a crucial market for Tesla.
Low-cost competitors, such as BYD, have forced the EV maker to reduce prices, cutting into its profit margins.
This price war has further contributed to the pressure on Tesla to streamline its operations and adapt to the changing market conditions.
In addition to the layoffs and market challenges, Reuters reported that Tesla had abandoned its plans to produce a budget-friendly starter car, tentatively called the Model 2, which was expected to start at $25,000.
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While Musk accused the outlet of “lying,” Reuters maintained that he did not identify any specific inaccuracies in their reporting.
