Tesla will lay off “more than 10%” of its global workforce, according to an internal letter sent by boss Elon Musk to employees and obtained by several media outlets, while the electric vehicle manufacturer is going through a bad patch.
In his letter, the manager explains that Tesla “has grown rapidly” in recent years, growth which has created “duplication (…) in certain activities”, according to him.
Elon Musk indicates that the manufacturer is “preparing for its next phase of growth” and, in doing so, seeks to achieve “cost savings” and “productivity gains”.
“We carried out an in-depth analysis and made the decision to reduce our workforce by more than 10% globally,” said the entrepreneur.
In its latest annual report, Tesla indicated that it had around 140,000 employees at the end of December, which means that the manufacturer will let go of at least 14,000 employees.
Asked by AFP, Tesla did not immediately respond.
“There is nothing I hate more” than making layoffs, “but you have to go through it,” wrote Elon Musk. “It will lean us, make us more innovative and mobilized for our next growth cycle.”
Delicate period
After years of success, the American automobile manufacturer is experiencing a delicate period.
It gave way to the Chinese BYD as the world’s leading manufacturer of electric vehicles in the last quarter of 2023.
Generally speaking, Tesla, which has positioned itself from the outset rather in the high-end segment, is suffering from competition from very low-priced Chinese cars.
In the first quarter of 2024, it delivered far fewer cars than expected and its production fell 1.6% year-on-year.
The Reuters agency reported ten days ago that the group had given up producing the Model 2, a model with a much more affordable price than the rest of its range, around $25,000. The information was denied, half-heartedly, by Elon Musk on X (formerly Twitter).
Tesla also plans to present its robotaxi on August 8, a vehicle that does not require a human driver, according to Elon Musk.
“First quarter deliveries were a nightmare, with Chinese and global demand for electric cars weakening,” said analysts at Wedbush Securities.
“Tesla is stuck between two ‘waves of growth’ and investors’ patience is starting to wear thin,” they added.
Also on Monday, Tesla’s senior vice president, Drew Baglino, announced his departure from X. He was one of the known faces of the manufacturer, where he spent 18 years.
According to the Bloomberg agency, another vice-president, Rohan Patel, will also leave the company.
Around 2:35 p.m. GMT, Tesla shares lost 2.88% on the New York Stock Exchange.