Tesla has told its employees that it is laying off thousands of employees. According to an internal memo sent by CEO Elon Musk, the decision was taken to cut costs and improve productivity. According to the report by Bloomberg, the CEO noted that the company has decided to cut about 10% of its global workforce.
Tesla set to layoff 14,000 employees
According to the report, the decision to cut 10% of its global workforce means that the company is laying off about 14,000 employees. The company announced at the end of 2023 that it boasted over 140,000 staff across the world. The layoff is coming after Tesla experienced its first year-over-year decline in sales in the last three years. The decline in sales has been attributed to the general downturn in the demand for electric vehicles worldwide.
The company reportedly warned its investors that the company could witness a slowdown in sales in 2024 than its report of 50% growth annually. The company is also still in the production cycle of several vehicles with its Cybertruck just making its market entrance and the Model Y into its fourth year without any notable updates. “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,” Elon Musk said.
Impact on growth strategy and market position
The email noted that due to the significant growth of the company, there has been a need for duplicates in some roles across the company. The CEO said that this triggered a company decision to carry out a review hence leading to the cut of the workforce. The CEO said he regrets the decision but notes that it is something that must be done. “There is nothing I hate more, but it must be done. This will enable us to be lean, innovative, and hungry for the next growth phase cycle,” Musk said.
According to an official statement, Tesla shipped about 1.8 million electric vehicles in 2023. However, the company had to slash prices on most of its models as it fought off competition and took measures to counterbalance the effects of high interest rates. The company also announced it has halted its plans to build a slightly affordable electric vehicle that would sell for $25,000.
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