Tesla ready to lay off more than 10% of its workforce
Despite requests for comment from the BBC, Tesla has yet to provide a response. In the email circulated by Mr. Musk, he outlined that after a comprehensive organizational evaluation, the company arrived at the difficult decision to reduce its workforce by more than 10% on a global level. This move signifies a significant restructuring within Tesla's operations as it navigates the electric vehicle market and seeks to optimize its resources.
Elon Musk expressed in a message that he deeply dislikes the decision but views it as a necessary step. He believes that this reduction in workforce will allow Tesla to become more streamlined, innovative, and driven as it prepares for its next phase of growth.
A Tesla employee who was informed of his termination reported to the BBC that he and other laid-off staff members had been denied access to their email accounts. Similarly, Andrew "Drew" Baglino, a member of the executive team, announced on X (formerly Twitter) that he had made the tough choice to depart from the company after serving for 18 years.
According to Tesla's website, Andrew "Drew" Baglino had served as senior vice president of the powertrain and energy engineering team since 2019. Another executive, Rohan Patel, who oversees public policy and business development, is also departing.
Baglino expressed personal gratitude to Elon Musk for providing him with opportunities to lead significant initiatives within the company. He praised Tesla's culture for its resilience and determination, which he believes makes it a unique and rewarding place to work.
The departures of Baglino and Patel are seen as indications that Tesla's rapid growth phase is facing significant challenges. Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, views their exits as a more significant negative signal than the announcement of job cuts.
Tesla is scheduled to release its quarterly earnings later this month. However, the company has already reported a decrease in vehicle deliveries in the first quarter, marking its first decline in nearly four years and falling below market expectations. Analysts have described these results as tumultuous.
Tesla has implemented production reductions at its Gigafactory in Shanghai and shorter shifts on the Cybertruck production line in Austin. These moves come as the company begins to experience the effects of declining demand for electric vehicles (EVs).
Despite reports suggesting otherwise, Elon Musk has denied that Tesla has abandoned plans to manufacture an affordable car, a goal he has long pursued to make EVs accessible to a wider audience.
In premarket trading on Monday, Tesla shares experienced a 0.8% decline. The company's slow response in updating its aging models, coupled with high interest rates that have dampened consumer interest in major purchases, has contributed to these challenges.
Additionally, Tesla faces increasing competition from China, where the emergence of inexpensive electric vehicles (EVs) has inundated the market with affordable options. This pressure from Chinese EV manufacturers adds to the challenges Tesla is experiencing as it seeks to maintain its position in the global EV market.
The influx of affordable models from Chinese companies presents a formidable challenge to Tesla's market share, prompting the company to adapt its strategies to remain competitive in this rapidly evolving landscape.
