Written by 11:24 pm Science & Technology Views: [tptn_views]

Tesla will lay off greater than 10% of worldwide workforce: Read the Elon Musk memo

Tesla will lay off greater than 10% of its global workforce, based on a memo sent to employees by CEO Elon Musk.

The company’s shares closed down greater than 5% on Monday.

“As we prepare the corporate for our next phase of growth, it is amazingly vital to have a look at every aspect of the corporate for cost reductions and increasing productivity,” Musk said within the memo obtained by CNBC.

“As a part of this effort, we have now done an intensive review of the organization and made the difficult decision to scale back our headcount by greater than 10% globally,” the memo said.

The memo was first reported by Electrek.

Tesla had 140,473 employees as of December 2023.

Tesla shares have taken a bruising in recent months, falling 31% 12 months up to now. While electric vehicle sales are still gaining popularity worldwide, their sales growth rate has slowed especially for Tesla. The company now faces more competition than ever.

To end 2023, China’s BYD temporarily dethroned Tesla because the world’s top EV maker. Chinese smartphone company Xiaomi in March said it could sell its first electric automotive for much lower than Tesla’s Model 3.

Musk has previously recognized that China, home to a big Tesla factory, might also house the corporate’s strongest competition. “There’s lots of people who find themselves on the market who think that the highest 10 automotive firms are going to be Tesla followed by nine Chinese automotive firms. I feel they may not be unsuitable,” Musk said in November.

Some would-be Tesla customers are actually skipping the brand owing to Musk’s incendiary rhetoric

Earlier this month, Tesla reported its first annual decline in vehicle deliveries since 2020, when the Covid-19 pandemic disrupted production extraneous of demand — first-quarter deliveries fell by 8.5% on the 12 months to 386,810 in the primary quarter, with output down 1.7% from a 12 months earlier and 12.5% sequentially despite discounts and incentives offered to customers throughout the quarter.

More recently, Tesla trimmed the subscription price of its premium driver assistance system, marketed as its Full Self-Driving or FSD option, for U.S. customers. The move was sharply at odds with Musk’s previous pledges that the FSD fee would only bulk up as Tesla added features and functionality to the system. Despite the brand name, the system doesn’t make Tesla vehicles self-driving and requires a driver attentive to the road, able to steer or brake at any time.

But the squeeze on the corporate’s operating margin — which got here in at 8.2% within the fourth quarter, down from 16% a 12 months earlier — stays, and Tesla has warned investors to brace that vehicle volume growth this 12 months “could also be notably lower” than the speed logged in 2023, saying it’s “currently between two major growth waves.”

Logistical challenges exacerbated Tesla’s problems this 12 months. The company’s component supply was a casualty of disruptions brought on by Yemeni Houthi maritime attacks within the Red Sea, while the automaker’s gigafactory near Berlin was forced to briefly suspend production because of suspected arson at a close-by electricity substation.

In addition to the layoffs, Tesla executives Drew Baglino and Rohan Patel announced Monday they’re leaving the corporate. Baglino had worked with Tesla since its early years, starting as a firmware and electrical engineer in 2006. Patel joined Tesla in 2016 after working as a senior advisor to former President Barack Obama on climate and other policy matters.

Tesla is scheduled to report first-quarter financial results on April 23.

Here’s the complete memo from Musk (transcribed by CNBC):

Over the years, we have now grown rapidly with multiple factories scaling across the globe. With this rapid growth there was duplication of roles and job functions in certain areas. As we prepare the corporate for our next phase of growth, it is amazingly vital to have a look at every aspect of the corporate for cost reductions and increasing productivity.

As a part of this effort, we have now done an intensive review of the organization and made the difficult decision to scale back our headcount by greater than 10% globally. There is nothing I hate more, but it surely have to be done. This will enable us to be lean, progressive and hungry for the following growth phase cycle.

I would really like to thank everyone who’s departing Tesla for his or her labor over time. I’m deeply grateful in your many contributions to our mission and we wish you well in your future opportunities. It may be very difficult to say goodbye.

For those remaining, I would really like to thanks upfront for the difficult job that is still ahead. We are developing a few of the most revolutionary technologies in auto, energy and artificial intelligence. As we prepare the corporate for the following phase of growth, your resolve will make an enormous difference in getting us there.

Thanks,
Elon

[mailpoet_form id="1"]
Close