Tesla will lay off at least 14,000 employees around the world, equating to 10 per cent of its workforce, after reporting its first decline in vehicle sales in four years.
In an email to employees obtained by EVs news site Electrik, Tesla CEO Elon Musk said that the rapid expansion of the company had led to many people doing the same role, and that a “thorough review” had identified areas to cut costs.
“Over the years, we have grown rapidly with multiple factories scaling around the globe,” Musk said in the email.
“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.”
This has led to the plan to reduce Tesla’s global workforce of more than 140,000 people by 10 per cent.
“There is nothing I hate more, but it must be done,” Musk said in the email to employees.
“This will enable us to be lean, innovative and hungry for the next growth phase cycle.”
After the reports, Musk confirmed the news in a post on X, saying that “about every five years, we need to reorganise and streamline the company for the next phase of growth”.
It was revealed this week that Tesla senior vice president Drew Bagliano will be leaving the company after 18 years in a variety of roles.
Tesla head of policy and business development Rohan Patel has also announced that he is leaving the company.
A bad start to the year for Tesla
Tesla has struggled this year in the face of a decline in demand for electric vehicles and growing competition from its rivals, particularly those based in China.
Earlier this month Tesla reported a year-on-year decline in sales for the first time since 2020.
In the first quarter of 2024 the company sold about 100,000 fewer vehicles than it did in the previous quarter, delivering 386,810 vehicles.
This is in stark contrast with the 422,875 vehicles sold by Tesla in the first quarter of 2023, and the first time the company has sold less than 400,000 vehicles since the third quarter of 2022.
This decline was blamed on the company being in the “early phase of the production ramp of the updated Model 3 at our Fremont factory”, shipping delays in the Red Sea and an arson attack at its factory in Berlin.
Earlier this year Tesla was also forced to “recall” more than 2 million cars it sold in the US and Canada since 2012.
US road safety authorities ordered Tesla to issue a software update to these vehicles over an issue not with the technology but with “driver misuse” of it.
Tesla has also reportedly ditched plans to release a more affordable version of its Model 2 vehicle, which was to cost about $US25,000.
Instead, the company will focus on the release of a fully autonomous vehicle known as ‘robotaxi’, which it plans to unveil in August.
This vehicle is believed to be built on Tesla’s next generation vehicle platform.
Major tech job losses this year
The layoffs at Tesla continue a number of significant job losses at major tech companies this year.
PayPal announced in February that it would be cutting 2,500 jobs, equating to 9 per cent of its workforce.
There have been significant layoffs at other tech giants this year including Google, Amazon, Twitch, eBay and Discord.
According to Layoffs.fyi, there have been more than 74,000 employees laid off across 255 tech companies in 2024 alone.
The same platform tracked more than 260,000 job cuts at 1,192 tech firms last year, with 2024 set to surpass this.
