tesla The company plans to lay off more than 10% of its global workforce, according to a memo sent to employees by CEO Elon Musk.
The company’s shares closed down more than 5% on Monday.
“As we prepare the company for its next phase of growth, it is critical that we look at all aspects of the company to reduce costs and improve productivity,” Musk said in a memo obtained by CNBC. ” he said.
“As part of this effort, we have overhauled our organization and made the difficult decision to reduce our workforce by more than 10% worldwide,” the memo said.
This memo was first reported by Electrek.
Tesla has 140,473 employees as of December 2023.
Tesla stock has taken a hit in recent months, falling 31% year-to-date. Electric car sales remain popular around the world, but sales growth has slowed, especially for Tesla. The company now faces more competition than ever before.
By the end of 2023, China’s BYD has temporarily supplanted Tesla as the world’s top EV maker. Chinese smartphone company Xiaomi announced in March that it would sell its first electric car at a price far lower than Tesla’s Model 3.
Mr. Musk has previously acknowledged that China, home to the massive Tesla factory, may also be the company’s strongest competitor. “Many people think that the top 10 car companies will be Tesla, followed by nine Chinese car companies. I don’t think they’re wrong,” Musk said in November.
Some would-be Tesla customers are abandoning the brand because of Musk’s inflammatory comments.
Earlier this month, Tesla reported its first annual drop in vehicle deliveries since 2020, when the coronavirus pandemic disrupted production unrelated to demand. Vehicle deliveries in the first quarter decreased by 8.5% year-on-year to 386,810 vehicles, and production decreased by 1.7 vehicles. Despite the discounts and incentives provided to customers throughout the quarter, the year-over-year increase was 12.5%, and the quarter-over-quarter increase was 12.5%.
Most recently, Tesla lowered the subscription price for its premium driver assistance systems, sold as Full Self-Driving or FSD options, for U.S. customers. The move was in sharp contradiction to Musk’s previous promise that FSD fees would only increase as Tesla added features to its system. Despite the brand name, the system does not make Tesla cars self-driving and requires drivers to keep their eyes on the road and be able to steer or brake at any time.
However, the company’s operating margin remains under pressure (operating margin fell to 8.2% in the fourth quarter from 16% a year ago), and Tesla has told investors that this year’s car sales growth will be It warned that the number “may be significantly lower” than the same period last year. This rate will be recorded in 2023 and is “currently between two major growth waves.”
Logistical challenges compounded Tesla’s problems this year. The company’s parts supply fell victim to disruptions caused by a maritime attack in the Red Sea by Yemen’s Houthis, while the automaker’s huge factory near Berlin was damaged by suspected arson at a nearby electrical substation. We were forced to temporarily suspend production.
In addition to the layoffs, Tesla executives Drew Baglino and Rohan Patel also announced they are leaving the company on Monday. Baglino has worked with Tesla since its early days, starting in 2006 as a firmware and electrical engineer. Patel joined Tesla in 2016 after serving as a senior adviser to former President Barack Obama on climate change and other policy issues.
Tesla is scheduled to announce its first quarter results on April 23rd.
Musk’s full memo is below (transcribed by CNBC):
Over the years, our company has grown rapidly by opening multiple factories around the world. This rapid growth has led to duplication of roles and duties in certain areas. As you prepare your company for its next stage of growth, it’s critical to look at all aspects of your company to reduce costs and increase productivity.
As part of this effort, we overhauled our organization and made the difficult decision to reduce our workforce by more than 10% worldwide. There’s nothing I hate more, but it has to be done. This allows us to be lean, innovative, and greedy for the next cycle of growth.
We would like to thank everyone who is retiring from Tesla for their years of service. We deeply appreciate your contributions to our mission and wish you all the best in your future endeavors. It’s very difficult to say goodbye.
To those left behind, I would like to thank them for the difficult work that continues. We develop some of the most innovative technologies in automotive, energy and artificial intelligence. As we prepare our company for the next stage of growth, your determination will make a big difference in getting us there.
thank you,
Elon
Correction: Tesla’s operating margin for the fourth quarter was 8.2%, down from 16% in the year-ago period. In previous versions, the time element was incorrectly listed.
