Tesla CEO, Elon Musk, has announced that the company will lay off over 10% of its global workforce, which could affect more than 14,000 employees.
Gatekeepers News reports that Musk cited the need to reduce costs and the duplication of roles as the reasons for the layoffs.
This news comes two weeks after Tesla announced its first year-over-year sales drop. The company has warned investors that sales growth could be “notably lower” this year than its goal of growing 50% each year.
In an email to the company’s staff, Musk wrote:
“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.”
“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,” he added.
Tesla staff have been anticipating potential job cuts as managers were asked to confirm whether each employee’s position is critical. Furthermore, some salaried employees were informed last year that the company would not offer merit-based equity awards as part of annual performance reviews.
Tesla had previously eliminated about 10% of salaried workers in mid-2022. Despite shipping a record 1.8 million electric vehicles (EVs) in 2023, Tesla spent much of the year lowering prices on its popular models to counterbalance high-interest rates and increased competition.
Tesla reportedly abandoned plans to build a lower-cost EV, which would have started at around $25,000, in favor of using the underlying platform to power an alleged robotaxi that Musk said will debut on August 8th, 2024.
