Thursday, July 25, 2024

Tesla is laying off more than 10% of its workforce

  • By Sheona McCallum
  • Technical Reporter

image source, Good pictures

Tesla to lay off more than 10% of its global electric vehicle workforce

In a memo first reported by news website Electrek, billionaire owner Elon Musk told employees he had nothing to hate, “but it had to be done.”

The world's largest automaker by market value had 140,473 employees worldwide as of December, according to its latest annual report.

Tesla did not respond to the BBC's request for comment.

“We have conducted a thorough review of the company and have made the difficult decision to reduce our workforce by more than 10% globally,” Mr Musk's email said.

“I don't have anything to hate, but it has to be done. It helps us stay lean, innovative and hungry for the next growth phase cycle.”

A Tesla employee who was told he was being let go told the BBC he was locked out of his emails, just like all other laid-off employees.

Andrew “Drew” Paglino, one of the management team, said in a post on X (formerly Twitter) on Monday that he had made the “difficult decision” to leave the company after 18 years.

Rohan Patel, another executive for public policy and business development, is also set to leave.

He personally thanked Mr Musk for giving him the opportunity to lead major initiatives at the company.

He added that the “never-say-die attitude and scrappiness” of the broader Tesla team made it a special place to work.

Their departures “suggest that Tesla's core growth phase is facing serious headwinds,” said Michael Ashley Shulman, chief investment officer at Running Point Capital Advisors, calling it a “bigger negative signal today” than the job cuts announcement.

However, analysts at Gartner and Hargreaves Lansdowne said the cuts are a sign of cost pressures as carmakers invest in new models and artificial intelligence.

Electric vehicle (EV) makers have been slow to refresh its aging models as high interest rates have dampened consumer appetite for big-ticket items.

The company is set to report its quarterly earnings later this month, but has already seen a decline in vehicle deliveries in the first quarter, the first in nearly four years and below market expectations. Some analysts described the results as “tumultuous”.

Last month, Tesla cut production at its Gigafactory in Shanghai, and last week Tesla told employees working on the Cybertruck that changes to the production line in Austin would be minimal.

Tesla is beginning to feel the impact of declining demand for electric vehicles (EVs).

Tesla shares fell 0.8% in premarket trading on Monday.

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