Tesla is reportedly cutting more than 10% of its global staff of 140,000, which has nearly doubled its overall headcount since the end of 2020. The cuts come amid more competition and softer demand in the electric car sector. CEO Elon Musk attributed the planned job cuts to the need for cost reductions and increasing productivity, according to an email sent to staff over the weekend. This is not the first time Tesla has cut staff, with previous cuts in 2019 and 2022.
Tesla reported a year-over-year decline in sales in the first three months of this year, its first drop since the height of the pandemic four years ago. The company briefly lost its title for the leader in global EV sales to Chinese automaker BYD in the fourth quarter but recaptured it in the first quarter, despite the drop in sales. Other automakers, such as General Motors and Ford, have also pulled back on their EV production due to softer-than-expected demand. EV sales continue to grow industrywide but not as fast as anticipated, with US EV sales up 40% last year.
Despite opening factories in Germany and Texas in 2022 and announcing plans for a plant in Mexico last year, Tesla’s headcount growth has slowed recently. After significant staff increases in previous years, the company only posted a 10% growth in employees in 2023, bringing global staffing levels to 140,473 at the end of last year. Tesla did not publicly confirm the latest round of cuts, and the company, which does not have a public relations staff, did not respond to a request for comment on the report.
Tesla’s shares, which were already down 31% so far this year, fell another 3% in early trading on the news of the job cuts. The company faces challenges in the competitive electric car market, with softer demand leading to a need for cost reductions and increased productivity. Despite these challenges, the industry as a whole continues to see growth in EV sales, although not as quickly as anticipated. The effects of more competition and changing market conditions are causing companies like Tesla to reevaluate their workforce and make strategic adjustments to their operations.
In the midst of these job cuts, Tesla remains focused on its mission to accelerate the world’s transition to sustainable energy. The company’s commitment to innovation and sustainability remains at the core of its business strategy, as it continues to lead the way in the electric vehicle market. The decision to reduce the global workforce by more than 10% is part of Tesla’s broader efforts to streamline operations and increase efficiency in response to changing market dynamics. Despite the challenges faced by the company, Tesla remains a key player in the electric vehicle industry and is poised to continue driving innovation and growth in the years to come.
