Tesla is planning to lay off about 14,000 employees, which is a tenth of its workforce. The decision comes after the company reported dismal first-quarter sales and is part of an effort to cut costs. CEO Elon Musk detailed the plans in a memo sent to employees, stating the importance of looking at every aspect of the company for cost reductions and increasing productivity. The news of the layoffs was first reported by an electric vehicle website, Electrek.
In addition to the layoffs, two key Tesla executives announced their departure from the company on the social media platform X. Andrew Baglino, senior vice president of powertrain and energy engineering, cited his decision to leave after 18 years with the company. Rohan Patel, senior global director of public policy and business development, also announced his departure after eight years. Baglino expressed difficulty in leaving and mentioned his plans to spend more time with family and his children. Musk thanked Baglino for his contributions to the company.
Following the news of the layoffs and departures, shares of Tesla fell by 4.8% on Monday afternoon. This comes as Tesla Inc. has already lost about one-third of its value so far this year due to softening sales of electric vehicles. The company reported a sharp decline in sales last quarter, as competition in the electric vehicle market increased globally and sales growth slowed down. Price cuts implemented by Tesla in response to competition failed to attract more buyers and ultimately impacted the company’s profit margins.
In an effort to combat slowing demand and competition, Tesla has been cutting prices on some of its models by as much as $20,000 since last year. These price cuts have led to a decrease in the value of used electric vehicles and have affected Tesla’s profit margins. Despite these challenges, Tesla has announced plans to reveal an autonomous robotaxi at an event in August. The company is striving to innovate and stay ahead in the competitive electric vehicle market.
The layoffs and executive departures at Tesla highlight the challenges the company is facing in the current market environment. With increasing competition, slowing sales growth, and the need to cut costs, Tesla is making strategic decisions to navigate these challenges. The departure of key executives, such as Andrew Baglino and Rohan Patel, adds to the uncertainty surrounding the company’s future direction. Tesla will need to continue to innovate and adapt to remain competitive in the evolving electric vehicle market.
