Tesla is cutting more than 10 per cent of its workforce — at least 14,000 jobs — as a worldwide EV slowdown and brutal price war hit the American automaker.
“We have . . . made the difficult decision to reduce our headcount by more than 10 per cent globally . . . this will enable us to be lean, innovative and hungry for the next growth phase cycle,” wrote Tesla’s chief executive Elon Musk in an internal memo to employees seen by the Financial Times.
The job cuts come as the slowdown in sales of EVs makes waves across the global car industry, with companies across the supply chain from South Korea to Germany slashing jobs and costs.
Unlike legacy carmakers, Tesla is particularly exposed to the slowdown in battery-powered cars given it exclusively makes EVs. Shares in the company, which declined 5.6 per cent on Monday, have fallen more than a third this year, making it the second-worst performer in the S&P 500 and underperforming those of legacy carmakers. In contrast, Toyota’s stock price has rallied more than 44 per cent in the same period.
The pressure is especially high in China, the world’s biggest auto market and the US EV maker’s second-largest market by sales, where competition between local EV makers and foreign carmakers is heating up.
Tesla’s share in China’s EV and hybrid market segment fell from 7.7 per cent to 6.6 per cent in the first two months of the year, according to the China Passenger Car Association.
The industry association expected Tesla to record sales of about 25,000 units in China this month, a 37 per cent decline from a year earlier.
In another setback for Musk, two of his top lieutenants have left the company. Drew Baglino, senior vice-president leading Tesla’s engineering and technology development for batteries, motors and energy products, announced on X today that he would leave after 18 years at the auto group. Another executive, Rohan Patel, Tesla’s vice-president of public policy, has also departed, the company confirmed.
On Tesla’s job cuts, Craig Irwin, senior research analyst at Roth MKM, said the news was not a “surprise per se”. “It’s more of a confession that growth isn’t going to come roaring back than anything,” he added.
One source familiar with the situation said it was still unclear how they would fall globally, with more restrictive rules on hiring and firing employees in countries such as Germany where Tesla has a gigafactory near Berlin.
The world’s largest EV maker had just over 140,000 employees, up from 48,000 in 2019, according to its latest SEC filing. The FT last week reported that Tesla was scouting locations in India for a new EV plant in which it would invest $2bn-$3bn.
The company has been through previous rounds of job cuts. In 2022, Musk announced a 10 per cent reduction in salaried workers, citing overstaffing and a “super bad feeling” about the state of the economy.
Tesla’s announcement comes as CATL, the world’s largest EV battery maker, on Monday reported lower-than-expected revenues of Rmb79.8bn ($11bn) for the January-March period. The battery maker’s second consecutive decline in quarterly sales highlighted the impact the EV slowdown was having on key suppliers.
Electrek, the tech publication, first reported news of the job cuts. Tesla declined to comment.
Additional reporting by Sylvia Pfeifer in London and Stephen Morris in San Francisco