Tesla CEO Elon Musk announced plans to lay off more than 10% of the company’s global workforce to streamline operations and prepare for future growth.
In an internal memo sent to Tesla employees on Sunday Musk explained that there has been “duplication of roles and job functions in certain areas” as the company has grown rapidly. “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.” Musk also emphasized the necessity of these cuts to make Tesla “lean, innovative, and hungry for the next growth phase.”
The move comes as Tesla’s stock dipped by 3% in morning trading, despite electric vehicle sales gaining popularity globally, Tesla has faced a slowdown in growth, with its shares falling by 31% year to date.
Competition in the electric vehicle market has intensified, with Chinese companies like BYD and Xiaomi posing significant challenges to Tesla’s dominance. Musk acknowledged this competition, stating, “There’s a lot of people who are out there who think that the top 10 car companies are going to be Tesla followed by nine Chinese car companies. I think they might not be wrong.”
Additionally, logistical challenges and supply chain disruptions have added to Tesla’s woes. The company’s component supply was affected by maritime attacks in the Red Sea, while its gigafactory near Berlin faced production delays due to suspected arson.
Read the full memo 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
Tesla has made multiple rounds of layoffs over the years, Tesla laid off 4%, of its workforce in New York in February last year as part of a performance review cycle. In June 2018, Tesla cut around 9% of its workforce in a round of layoffs. Also in 2019, Tesla announced it was laying off 7% of its full-time workforce, which amounted to over 3,000 people. This was to streamline the company and prepare it for tough times ahead according to Musk.
