Tesla is the most recent major corporation to undergo layoffs, reducing its workforce by "more than 10%" globally, as indicated in an internal memo from Elon Musk circulated on Sunday, reported by Business Insider. These job cuts follow disappointing delivery figures from the car manufacturer.
In the memo, Musk expressed his dislike for such actions but emphasized their necessity, 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."
According to sources familiar with the matter, some Tesla employees found themselves unable to access their emails and Teams accounts by Monday.
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The company's first-quarter delivery data revealed a significant decline, falling below Wall Street's estimates. Deliveries dropped by 20% from the previous quarter and over 8% from the same period last year, marking Tesla's first year-on-year sales decrease since 2020.
In a press statement, Tesla attributed the drop in deliveries to several factors, including challenges in ramping up production for its updated Model 3, an arson incident at its Berlin factory, and supply chain disruptions stemming from the Red Sea conflict.
Speculation about impending layoffs has circulated in recent months. In February, reports emerged that the automaker instructed managers to identify critical roles within the company. During this time, Tesla also postponed performance evaluations for some employees, according to Bloomberg. These evaluations were later rescheduled, according to three sources cited by Business Insider.
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Before the layoffs, Tesla reported a global workforce of more than 140,000 employees, with over 20,000 individuals employed at its Fremont factory in California.
During Tesla's earnings call in January, Musk cautioned about a potential slowdown in sales for 2024, indicating that the company was navigating "between two major growth waves."
Throughout the past year, the automaker has consistently reduced prices for its vehicles and ventured into advertising for the first time in its history. Tesla is also encountering heightened competition from Chinese automakers.
Musk has cautioned that Tesla may encounter production challenges in the upcoming year as it endeavors to scale up production of the Cybertruck and Tesla's next-generation vehicle platform.
