Global Tesla Layoffs of “More Than 10%” Include Leading Markets China and the U.S.

On April 15, 2024, a leaked company-wide email from Tesla CEO Elon Musk surfaced, announcing layoffs at Tesla of “more than 10%” of the company’s global workforce.

The full text of the email is below:

“Over the years, we have grown rapidly with multiple factories scaling around the globe. With this rapid growth there has been duplication of roles and job functions in certain areas. 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.

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.

I would like to thank everyone who is departing Tesla for their hard work over the years. I’m deeply grateful for your many contributions to our mission and we wish you well in your future opportunities. It is very difficult to say goodbye.

For those remaining, I would like to thank you in advance for the difficult job that remains ahead. We are developing some of the most revolutionary technologies in auto, energy and artificial intelligence. As we prepare the company for the next phase of growth, your resolve will make a huge difference in getting us there.”

Thanks,
Elon

China and U.S. Locations Will Reportedly See the Most Tesla Layoffs

On April 16, 2024, Reuters reported more information on the layoffs. Five unnamed sources told Reuters that the global job cuts will include reducing the Tesla workforce in the U.S. and China, the automaker’s two largest markets, across the sales, tech, and engineering sectors.

The sources spoke with Reuters anonymously, as they did not have permission to make announcements to the media.

U.S. Tesla Layoffs

Some service centers in the U.S. saw immediate layoffs. A source told Reuters that one location laid off all front-of-house staff. A Tesla team member in California apparently posted a spreadsheet on LinkedIn of over 140 staff, primarily engineers, who were laid off.

Tesla Job Cuts in China

Two sources told Reuters that Tesla’s members of the China sales team were laid off. One source said more than 10% would be laid off.

Possible Tesla Layoffs in Germany

Germany has strict rules about layoffs. However, about 1,000 workers in Germany are reportedly on temporary contracts, making it easier for Tesla to lay them off.

German union I.G. Metall said in a statement on Monday that Tesla had not consulted the works council before sending the email. Notifying the works council prior to taking action, such as sending the reported email from Musk, is customary in Germany.

German media released reports that 3,000 of Tesla’s roughly 12,000 staff had been let go, which Tesla refuted in a statement emailed to Reuters.

“We will pursue the measure for Gigafactory Berlin-Brandenburg against the background of all labour law and co-determination requirements, bringing in the works council,” Tesla Germany said on Tuesday in an emailed statement to Reuters. The email added that no workers in Germany had been notified yet.

Tesla Layoffs Likely Due to Recent Losses

Tesla is experiencing falling sales and an intensifying price war for electric vehicles globally in the first quarter of 2024. Tesla’s shares dipped significantly in the first quarter of 2024, taking a 29% plunge, according to a Tesla profit report. This was the company’s worst stock performance since 2022. It was the third-steepest quarterly drop in the company’s history. Shares closed down 5.6% on Monday.

Recent price cuts by Tesla did not increase demand enough, as Tesla’s global vehicle deliveries in the first quarter fell by 8.5%, the first fall in almost four years. Deliveries declined to 386,810 vehicles from a year ago. The company produced 433,371 vehicles during the first quarter, creating a significant overstock.

Why Is Tesla in Trouble?

Experts disagree on why Tesla is facing its recent troubles. Some experts believe there’s a global downturn in EV sales, which is causing Tesla’s troubles. This is not evident in Tesla competitor BMW’s recent success, the company had a fantastic Q1 in its EV sector. Deliveries of the BMW i4, iX1, and i7 jumped 41% in Q1, in comparison to the same period last year. BMW’s entire EV sector sales rose by 28% in Q1.

Other experts say Tesla’s CEO, Elon Musk, is too distracted by X (formerly Twitter) and other business ventures to focus enough on Tesla. Some say delaying the Model 2, Tesla’s planned small $25K EV to compete with China, was a mistake. The Model 2 would sell in astounding amounts and drive adoption forward, which would both be good for Tesla.

Some credit China with Tesla’s troubles. China’s BYD Seagull is the most significant example of an inexpensive Chinese EV, with its $9,698 price tag, significantly less than the average American EV’s price tag, including all Tesla models.

Some believe the Cybertruck was a big mistake. Musk admitted that the Cybertruck was not profitable and would not be for some time.

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