In a memo obtained by news website Electrek, Tesla’s billionaire owner Elon Musk informed staff of an impending workforce reduction, citing the necessity of the action despite his personal distaste for it.
According to Tesla’s latest annual report, the company boasted a global workforce of 140,473 employees as of December.
Tesla did not provide an immediate response to the BBC’s request for comment on the matter.
The memo outlined a comprehensive review of the organization, culminating in the difficult decision to downsize the workforce by more than 10% worldwide.
Musk emphasized the necessity of the reduction to streamline operations, foster innovation, and prime the company for future growth opportunities.
An affected Tesla employee disclosed to the BBC that those slated for layoff had been locked out of their email accounts, signaling the immediate effect of the decision on affected staff.
The looming staff reduction comes as Tesla prepares to announce its quarterly earnings, with reports already indicating a decline in vehicle deliveries in the first quarter, marking the first such decline in nearly four years and falling short of market expectations.
Recent measures such as production slowdowns at the Gigafactory in Shanghai and shorter shifts for Cybertruck production line workers in Austin hint at broader operational adjustments within the company.
Tesla’s decision to scrap plans for an inexpensive car, a departure from Musk’s vision of making electric vehicles affordable for the masses, reflects the shifting dynamics in the EV market.
Pre-market trading saw Tesla shares dip by 0.8% on Monday, underscoring investor concerns amidst slowing demand and a delayed model refresh cycle exacerbated by high interest rates dampening consumer spending.
Additionally, Tesla faces mounting pressure from Chinese EV manufacturers flooding the market with affordable models, intensifying competition and further challenging Tesla’s market position.