Electric vehicle manufacturer Tesla (NASDAQ: TSLA) has announced plans to lay off a section of its staff as the company grapples with a broader slowdown in the EV market segment.
Following rumors of an impending layoff, CEO Elon Musk, in a company-wide email, revealed that the company has decided to lay off at least 10% of its global workforce, totalling about 14,000 employees.
In the email shared by Tsla Chan, a Tesla News X (formerly Twitter) account on April 15, Musk pointed out that the layoffs are part of preparing the company for the next growth phase.
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The executive acknowledged that the recent growth of Tesla, characterized by unveiling new models such as the Cybertruck and opening new factories, has led to a duplication of several roles, necessitating strategies to reduce costs.
“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% globally. 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,” the email read in part.
Musk’s hints at potential layoffs
Notably, Musk initially hinted at possible drastic measures in Tesla’s operations. The executive commented on the global economy, expressing caution and leading to a slowdown in certain projects.
It’s worth noting that Tesla’s decision follows a poor quarterly delivery report, in which the company significantly missed estimates and experienced a rare year-over-year reduction in sales.
Specifically, the company delivered 387,000 cars during the first three months of 2024, marking a 20% decrease from the previous quarter and an 8% decline YoY.
At the same time, Tesla has been grappling with competition, especially from Chinese manufacturers.
In the meantime, it will be interesting to monitor how the Tesla stock reacts to the news. Indeed, the equity has been on the losing end for most of the year, with entities such as Bank of America (NYSE: BAC) revising their target for the stock.
As of press time, TSLA was trading at $171.05, with year-to-date losses of about 31%. Additionally, the stock is down almost 2% in pre-market trading as of April 15 which could set a precedent for the rest of the week.
