Tesla Lays off Over 10 Percent of Its International Workforce

Tesla informed its employees that it is cutting over 10 percent of its worldwide staff, according to a memo obtained by Reuters on Monday. This decision comes as Tesla faces challenges such as declining sales and increased competition in the electric vehicle market.

Elon Musk, the CEO of Tesla, responded to this news on X by saying, “About every five years, we need to reorganize and streamline the company for the next phase of growth.”

Musk last announced job cuts in 2022, expressing concerns about the economy. Although Tesla didn’t specify the number of jobs cut in 2022, its employee count surged from about 100,000 in late 2021 to over 140,000 by late 2023, as per SEC filings.

Monday’s dismissals took immediate effect, as stated in the email sent to affected employees, according to Reuters.

Tesla’s two senior vice presidents left the company

On Monday, Tesla’s senior vice president in charge of battery development, Drew Baglino, and vice president for public policy and business development, Rohan Patel, both revealed their departure from the company on X.

Baglino was one of four leaders listed on Tesla’s investor relations website, alongside CEO Elon Musk. Musk expressed gratitude to both executives for their contributions in response to their notes on X.

$TSLA Tesla lays off over 10% of its workforce.

For context, Tesla's headcount grew 10% in FY23 to 140K employees and nearly doubled since FY20.

Here's a look at the latest quarter. pic.twitter.com/KW0bssVVFt

— App Economy Insights (@EconomyApp) April 15, 2024

Scott Acheychek, CEO of Rex Shares, which oversees ETFs heavily invested in Tesla stock, viewed the reduction in headcount as a strategic move. He highlighted Tesla’s overall year-on-year increase in headcount as evidence that the company is still experiencing growth.

However, Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, considered the departure of senior executives as the more significant negative signal on that day. He suggested it indicated potential challenges to Tesla’s growth trajectory.

Tesla shares dropped along with other EV manufacturers

On Monday, Tesla’s shares dropped by 2.6 percent during midday trading. Similarly, other electric vehicle (EV) manufacturers such as Rivian Automotive, Lucid Group, and VinFast Auto also experienced declines ranging from 2 percent to 7.4 percent.

In a memo sent to all staff, Musk emphasized the importance of scrutinizing every aspect of the company to cut costs and enhance productivity as they prepare for the next phase of growth. As a result, Tesla made the tough decision to reduce its global headcount by more than 10 percent.

Reuters obtained an email sent to at least three U.S. employees, informing them of their immediate dismissal. Tesla has not yet responded to requests for comment, according to Reuters.

Following an exclusive Reuters report on April 5th, Tesla’s layoffs occurred. The report revealed the cancellation of a highly anticipated affordable car, the Model 2, which was expected to cost $25,000. Investors had expected this car to boost mass-market growth with Musk previously announcing production to begin in late 2025.

Shortly after the report, Musk posted “Reuters is lying” on his social media platform X without providing specific details on the alleged inaccuracies. Since then, Musk has remained silent on the topic, leading investors and analysts to speculate about the car’s future, as reported by Reuters.