Tesla to cut 10pc of global workforce

MULTIPLE news organisations are reporting that Tesla is planning to cut more than 10 per cent of its global workforce.

 

Citing a leaked internal memo, the reports suggest the EV manufacturer is aiming to cut around 15,000 employees from its payroll, while also pausing certain stock rewards and cancelling some employee annual reviews.

 

The company also plans to reduce production at its Shanghai Gigafactory as slowing sales of Tesla models impact its bottom line.

 

“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,” said Tesla chief executive officer Elon Musk in the memo.

 

“As part of this effort, we have done a thorough review of the organisation and made the difficult decision to reduce our headcount by more than 10 per cent globally.”

 

Tesla is understood to have a global workforce of 140,473 staff.

 

In further signs of instability, Tesla senior vice president of battery development Drew Baglino announced his resignation on X (formerly Twitter), the social media platform owned by Tesla CEO, Elon Musk.

 

Bloomberg reports that Rohan Patel, vice president for public policy and business development at Tesla, has also resigned.

 

In February 2023, Tesla laid off four per cent of its global workforce as part of a performance review cycle. The move was made shortly before a union campaign was to be launched by employees.

 

Tesla recorded a first quarter decline in vehicle sales, its first in nearly four years and below market expectations. It recorded a gross profit margin of 17.6 per cent in the final quarter of 2023, the lowest in four years.

 

The EV manufacturer recently scrapped plans to produce an inexpensive model – abandoning one of Mr Musk’s longstanding goals to make an affordable EV for the masses. It is understood Tesla will now prioritise development of its robotaxi.

 

Tesla has been slow to refresh its model mix while at the same time facing mounting pressure from the growth of cheaper Chinese models.

 

The news comes just weeks after Tesla’s consideration score took a hit with US customers.

 

Survey participants said that Tesla CEO Elon Musk’s “polarising persona” and “antics and politics” were dragging down the brand’s influence, the brand’s consideration score falling to a low of 31 per cent.

 

“It is very likely that Musk himself is contributing to the reputational downfall (of Tesla),” said survey firm Caliber’s chief executive officer Shahar Silbershatz.

 

The report suggests that economic fears, a lack of affordable new models, recent reports of toxic waste dumping, and rising competition from cheaper rivals are also placing pressure on Tesla.

 

Cox Automotive suggests overall EV sales in the United States are forecast to increase by 15 per cent in the first quarter of 2024, while Tesla sales will increase by just three per cent.