Tesla plans to lay off more than 10% of its employees worldwide, according to an internal memo leaked earlier today.
In the document, Tesla CEO Elon 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.”
While the memo did not cite a specific number of layoffs, a 10% workforce reduction would impact roughly 14,000 positions worldwide. Reuters reports, based on anonymous sources, that some Tesla employees in the U.S. have already been notified of their termination.
The news follows the release of the electric vehicle brand’s first quarter deliveries report, which contained disappointing numbers despite marked improvements in affordability. Since early 2023, Tesla has sought to boost demand through aggressive price cuts, and while the strategy accelerated sales throughout last year, its effectiveness appears to have lessened after December. With analysts dialing back expectations for the EV segment in 2024, the company now faces a potentially prolonged sales shortfall after having already sacrificed its profit margins, making cost-cutting measures a necessity.
Earlier this month, Reuters claimed that Tesla had also canceled the development of its budget-friendly model, a report that Musk was quick to call false. While it is unclear whether the vehicle is still being worked on or not, the company’s aging product lineup has been frequently cited as an obstacle to sales growth.
