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Tesla Plans to Layoff 10% of Its Global Workforce Amid Sales Decline

Tesla Plans to Layoff 10% of Its Global Workforce Amid Sales Decline

American multinational automotive and clean energy company Tesla has announced plans to lay off 10% of its workforce as it grapples with declining sales and an intensifying price war for electric vehicles (EVs).

In a company-wide memo, Tesla CEO Elon Musk noted that the layoffs could affect about 14,000 of the 140,473 workers employed by the Austin, Texas, company at the end of last year.

Musk further disclosed that as the company prepares for its next phase, it was crucial to examine areas where it could cut costs and increase productivity.

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Part of the memo reads,

“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”.

Musk last announced a round of job cuts in 2022, after telling executives he had a “super bad feeling” about the economy. Still, Tesla’s headcount has risen from around 100,000 in late 2021 to over 140,000 in late 2023, according to filings with U.S. regulators.

Amidst Tesla’s recent layoff plans, two key executives at the company announced on X their departure from the company. Andrew Baglino, senior vice president of powertrain and energy engineering, wrote that he had made the decision to leave after 18 years with the company.

On the other hand, Rohan Patel, senior global director of public policy and business development, also wrote on X that he was leaving Tesla, after eight years.

Lately, Tesla has been facing a decline in sales, amidst a competitive EV market. The company shares have plunged significantly, down 31% year-to-date. In a report by Tekedia, Tesla reported worse-than-expected first-quarter earnings.

The company delivered about 387,000 vehicles over the first three months of the year, falling short of analysts expectation of 457,000. This marked a 9% decline compared to 423,000 deliveries recorded in Q1 2023, which happens to be the first worse-than-expected Q1 earnings since 2020.

This forced Tesla to slash the prices of its vehicles in a bid to boost sales. The EV giant recently trimmed the subscription price of its premium driver assistance system, marketed as its Full Self-Driving or FSD option, for U.S customers.

Also, several developments in China one of Tesla’s big markets, have negatively impacted the revenue of the automaker this year. The company announced steep price cuts in the Asian country in early January amid stiff competition, but it has however failed to see a sales boost. In February this year, deliveries in the country fell almost 20% year over year.

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