Tesla has cut more than 10% of its staff — or at least 14,000 positions — due to a global EV slowdown, and a brutal price war.
“We have. . . We made the difficult choice to reduce our global headcount by over 10 percent. . . This will allow us to be lean and innovative, as well as hungry for the next phase of growth,” Tesla’s CEO Elon Musk wrote in an internal memo sent to its employees.
As the sales of EVs slow down, companies from South Korea to Germany are cutting costs and jobs.
Tesla, unlike legacy carmakers is especially exposed to the slowdown of battery-powered vehicles as it only makes EVs. The company’s shares, which fell 5.6 percent on Monday, are down more than a quarter this year. This makes it the S&P 500’s second worst performer and underperforms legacy carmakers. Toyota’s share price, on the other hand, has risen by more than 44% in that same time period.
In China, which is the largest auto market in the world and second-largest by sales for the US EV manufacturer, there’s a fierce competition between the local EV makers and foreign carmakers .
According to the China Passenger Car Association, Tesla’s market share in China’s EV/hybrid segment dropped from 7.7% to 6.6% in the first half of this year.
The industry association predicted that Tesla would record sales of around 25,000 units in China during this month. This represents a 37% decline from the previous year.
Two of Musk’s top lieutenants left the company in a further setback. Drew Baglino announced today on X that he was leaving the auto group after 18 years. He is the senior vice president leading Tesla’s technology and engineering development for motors, batteries and energy products. The company also confirmed that Rohan Patel has left his position as vice-president for public policy at Tesla.
Craig Irwin said that the news of Tesla’s layoffs was not “surprising” per se. He added that the news was not a “surprise”.
A source familiar with the matter said that it was unclear what would happen globally. In countries like Germany, where Tesla has its gigafactory close to Berlin, there are more restrictive rules for hiring and terminating employees.
Tesla was reportedly scouting sites in India to build a new EV factory, in which it planned to invest between $2bn and $3bn.
The company has gone through several rounds of job reductions. Musk announced in 2022 a 10% reduction of salaried employees, citing overstaffing, and a “super bad feeling” about the state the economy.
CATL, which is the largest EV battery manufacturer in the world, announced on Monday that its revenues for the period January-March were lower than expected at Rmb79.8bn (about $11bn). The second consecutive quarterly decline in sales for the battery maker highlighted the impact of the EV slowdown on key suppliers.
Electrek is a tech magazine that first broke the news about the job reductions. Tesla declined to make a comment.