Tesla Announces Layoffs of Over 10% of Global Workforce Amid Slowing EV Demand

Tesla, the leading electric vehicle manufacturer, has announced plans to reduce its global workforce by more than 10%, affecting around 14,000 employees. The layoffs come as the company faces slowing demand for electric vehicles and increased competition in the market.

In a memo to employees, Tesla CEO Elon Musk cited the need for cost reductions and increased productivity as the company prepares for its next phase of growth. The job cuts will span across various departments, including sales, technology, and engineering, and will impact Tesla's operations in the U.S. and China, its two largest markets.

The announcement follows disappointing first-quarter delivery results, with Tesla reporting an 8.5% year-over-year decline in global sales. The company delivered 386,810 vehicles worldwide in the first three months of 2024, falling short of Wall Street's expectations and marking the first annual decline since the second quarter of 2020.

Why this matters: The layoffs at Tesla reflect the broader challenges facing the electric vehicle industry, as demand slows and competition intensifies. The move raises questions about the long-term growth prospects for Tesla and the wider adoption of electric vehicles, which are essential for addressing climate change and reducing air pollution.

Tesla's stock price has declined significantly in recent months, driven by concerns about the company's ability to maintain its growth trajectory amid increasing competition from traditional automakers and new rivals from China. The layoffs are expected to help Tesla align its cost structure with current market realities and maintain profitability.

In addition to the workforce reduction, Tesla is also experiencing a reshuffling at the executive level, with the departure of two key figures: Drew Baglino, Tesla's Senior Vice President of Powertrain and Energy, and Rohan Patel, Vice President of Public Policy and Business Development.

Tesla is set to report its comprehensive first-quarter earnings on April 23, 2024, and investors will be closely watching for insights into the company's strategy for navigating the challenges ahead.

Key Takeaways

• Tesla to cut global workforce by over 10%, affecting ~14,000 employees.
• Layoffs due to slowing EV demand and increased competition in the market.
• Tesla's Q1 2024 deliveries declined 8.5% YoY, falling short of expectations.
• Layoffs to help Tesla align costs with market realities and maintain profitability.
• Tesla to report Q1 2024 earnings on April 23, with focus on strategy.