Tesla is reportedly scaling back its global staff by more than 10%, a move reflecting the impacts of increased competition and softer demand within the electric car sector.
CEO Elon Musk outlined the rationale for the cuts in an email to employees, citing the need for “cost reductions and increasing productivity,” as reported by Reuters and Electrek.
Musk mentioned in the email, “We have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally,” acknowledging the challenges faced by the company.
This decision comes as Tesla experienced its first year-over-year decline in sales in the first quarter of this year since the height of the pandemic four years ago.
Despite this, Tesla regained its position as the leader in global EV sales in the first quarter.
The electric vehicle industry as a whole has faced some setbacks, with other automakers like General Motors and Ford also scaling back EV production due to softer-than-expected demand.
However, industrywide EV sales are still growing, albeit not as rapidly as initially projected.
Tesla’s workforce growth has slowed in recent years, with a 40% increase in staff in 2021, a 29% increase in 2022, and just under a 10% growth in 2023, according to company filings.
This latest round of job cuts follows previous reductions in 2019 and 2022, as confirmed by public statements from Musk.
Despite these challenges, Tesla continues to expand its operations, having opened factories in Germany and Texas in 2022 and announced plans for a plant in Mexico.
However, the company’s headcount growth has significantly slowed, leading to the recent decision to reduce its workforce globally.
Tesla’s stock fell by 3% in early trading following the news of the job cuts, adding to a year-to-date decline of 31% as of Friday’s close.
Tesla has not officially confirmed the email or the job cuts publicly, and requests for comment from the company remained unanswered.
Source-CNN
