Tesla, the pioneering electric vehicle (EV) manufacturer, has announced a significant reduction in its global workforce, affecting more than 10% of its employees. This strategic move comes amidst increasing competitive pressures and evolving market dynamics.
In an internal memo, CEO Elon Musk communicated this decision, emphasising the company’s focus on cost reduction and productivity enhancement as Tesla gears up for its next growth phase. “We’ve conducted a thorough review of our organisation and made the difficult decision to reduce our headcount by more than 10% globally,” Musk stated in the memo.
The announcement follows Tesla’s recent challenges in the EV market, including a 31% decline in its shares year-to-date, reflecting decreased demand and intensifying competition. Chinese automaker BYD recently surpassed Tesla to become the world’s largest seller of EVs, benefiting from favourable subsidies in China. Elon Musk has previously acknowledged the competitive landscape in China, recognising it as a potential stronghold for Tesla’s rivals.
Tesla reported its first annual decline in vehicle deliveries since 2020, with first-quarter deliveries decreasing by 8.5% year-on-year to 386,810. The company’s operating margin also contracted to 8.2% in the fourth quarter from 16% in the previous year. Additionally, Tesla has cautioned investors about potentially subdued vehicle volume growth in 2024 compared to the previous year, citing ongoing challenges and market uncertainties.
The company has also faced logistical disruptions, including component supply issues, due to Yemeni Houthi maritime attacks in the Red Sea. Moreover, production at Tesla’s gigafactory near Berlin was briefly suspended following a suspected arson incident at a nearby electricity substation.
Tesla is set to release its first-quarter financial results on April 23. This announcement will offer further insights into the company’s financial health and strategic direction amidst the changing automotive landscape.
