Tesla has announced layoffs affecting more than 10% of its workforce, according to an internal memo.
This move comes after the electric carmaker’s delivery numbers fell below Wall Street’s expectations earlier this month.
Tesla, which employs over 140,000 people globally, is the latest major company to implement staff reductions.
CEO Elon Musk explained the decision in the memo, stating, “There is nothing I hate more, but it must be done. This will enable us to be lean, innovative and hungry for the next growth cycle.”
Some employees reportedly lost access to their emails and Teams by Monday.
The first-quarter delivery numbers showed a significant decline, with deliveries falling 20% from the previous quarter and over 8% from the same time last year.
This marks Tesla’s first year-on-year sales decline since 2020. Tesla attributed the decline to production challenges for its refreshed Model 3, an arson attack at its factory near Berlin, and supply-chain disruptions due to the Red Sea conflict.
Rumors of an impending layoff had been circulating for months. In February, Bloomberg reported that Tesla asked managers to identify the most critical roles in the company and postponed some workers’ performance reviews, which were later rescheduled.
Tesla has a history of reducing staff to cut costs. Last year, the company laid off dozens of employees working on its Autopilot service at a site in Buffalo, New York, citing poor performance.
Musk has also warned of a sales slowdown in 2024 and has emphasized the need for Tesla to go between two major growth waves.
Despite these challenges, Tesla has been making efforts to clear out inventory by offering steep discounts on its Model Y SUV and has attempted advertising for the first time in its history.
The company is also facing increased competition from Chinese automakers and potential production hurdles as it ramps up production of the Cybertruck and its next-gen vehicle platform.
