According to a leaked internal memo, layoffs have already started.
The list of corporations that have recently implemented widespread layoffs includes Tesla, which has entered the ranks of those companies. The news that the corporation is laying off “more than 10 percent” of its personnel was initially reported by Electrek and has since been confirmed by Reuters, the Washington Post, and the New York Times. As of December 2023, the company had more than 140,000 employees. On the other hand, the publication came across an internal memo that mentioned the percentage, but it did not specify the precise number of positions that were impacted. Furthermore, according to a source who spoke with Reuters, certain employees have already been informed, which is an indication that the layoffs have already started.
Elon Musk, the CEO of Tesla, is said to have written these words in the memo: “As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity.” “As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10 percent globally.”
It was revealed at the beginning of February that the corporation had questioned managers about which jobs of employees were crucial, which was a strong indication that layoffs were on the horizon. According to Bloomberg, the manufacturer also decided to cancel the biannual performance reviews that were scheduled for some employees.
Tesla has effectively doubled its staff since the year 2020, and by the end of the year 2023, the company had more than 140,000 people. In spite of the fact that it has implemented a number of rounds of layoffs over the course of its existence (including the termination of dozens of employees working on the Autopilot team a year ago), the company’s headcount increased by almost ten percent in 2023 alone.
During the quarterly earnings call that Tesla held in January, CEO Elon Musk mentioned that the company was in the midst of “two major growth waves.” To begin, there was the widespread adoption of the Model 3 and the Y. In the next step, the company appears to be placing its hopes on an electric vehicle that is more affordable. That is expected to be released in the latter half of 2025; however, Reuters reports that Tesla may be abandoning the more affordable variant in order to concentrate on robotaxis. In a statement that backed up the reporting that was published by Reuters today, Electrek stated that the low-cost model has been essentially postponed since Tesla is investing its resources into robotaxis instead. Within the context of the layoffs, the website also mentions that “many people involved” in the low-cost car project were terminated from their positions. Musk has stated that the presentation of the robotaxi is scheduled to take place on August 8th.
Following Musk’s warning to investors that they should anticipate “notably lower” sales growth this year, attempts to reduce costs may have been made in an effort to placate those investors. In fact, Tesla experienced a decline in sales during the first three months of the year 2024. The number of deliveries fell by eight percent compared to the previous year and by twenty percent, compared to the previous quarter. On April 23, 2024, the corporation is scheduled to release its earnings and sales report for the first quarter of the year 2024.