Tesla has announced a significant reduction of its workforce, affecting over 10% of its approximately 140,000 employees worldwide. The decision was communicated through a company-wide email that was leaked shortly after its dissemination, confirming rumors of potential layoffs as high as 20%. This workforce reduction is part of Tesla’s broader organizational review to eliminate role duplications and enhance productivity as it prepares for future growth phases.
The reasons cited for the layoffs are the need for cost reduction and a strategic pivot towards optimizing operational efficiency. The layoffs coincide with a decrease in car deliveries and a missed sales forecast, particularly noted in the Chinese market, where local EV manufacturers are becoming increasingly competitive. Tesla’s sales in China have drastically fallen, especially as a Chinese EV maker overtook Tesla in battery-only car sales in the final quarter of 2023. The operational adjustments also involve scaled-down production at Gigafactory Shanghai and reduced Cybertruck production shifts at Gigafactory Texas.
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The layoff announcement affects staff at various levels, including two prominent executives, Drew Baglino and Rohan Patel. They appeared to lose their Tesla-affiliated identification on Twitter. In his internal email, Elon Musk thanked departing employees for their contributions and highlighted the difficulty of the decision. In his email, Musk expressed gratitude towards the remaining employees, acknowledging their crucial role in Tesla’s continued innovation in auto, energy, and AI technologies.
The complete text of the email is provided below:
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. 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. This will enable us to be lean, innovative and hungry for the next growth phase cycle.
I would like to thank everyone who is departing Tesla for their hard work over the years. I’m deeply grateful for your many contributions to our mission and we wish you well in your future opportunities. It is very difficult to say goodbye.
For those remaining, I would like to thank you in advance for the difficult job that remains ahead. We are developing some of the most revolutionary technologies in auto, energy and artificial intelligence. As we prepare the company for the next phase of growth, your resolve will make a huge difference in getting us there.
Thanks,
Elon
External observers have criticized Tesla for its frequent restructuring and layoffs, which could have negative long-term effects on employee morale and institutional knowledge. Despite this, Tesla continues to be a major player in advancing the automotive and energy sectors, setting industry standards and practices.
Sources: Auto Finance News, Electrek
