Published 14:14 IST, April 16th 2024

Tesla to cut over 10% of global workforce amid sales decline

Tesla laid off 4% of its New York workforce in February last year during a performance review cycle, just before an employee union campaign.

Reported by: Business Desk
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Tesla to lay off more than 10% of staff globally | Image: Republic

Tesla workforce reduction: Tesla is set to reduce its global workforce by more than 10 per cent, according to an internal memo obtained by Reuters on Monday. The move comes as the company faces declining sales and increased competition in the electric vehicle market.

With 140,473 employees worldwide as of December 2023, Tesla is restructuring to adapt to changing market conditions. While the memo did not specify the exact number of jobs affected, some employees have already been notified of the layoffs, sources told Reuters.

Operational efficiency review

CEO Elon Musk stated in the memo that the company is undergoing a thorough review to streamline operations and boost productivity.

The news follows a challenging period for Tesla, with its stock falling approximately 31 per cent this year. In contrast, traditional automakers like Toyota Motor and General Motors have seen their shares rise notably amid a slower transition towards electric vehicles.

Tesla's struggles are not unique, as evidenced by energy giant BP cutting over 10 per cent of its workforce in its EV charging business due to slower-than-expected demand. Analysts suggest that Tesla's maturity as a company may contribute to the layoffs, signalling management's expectation of continued weak demand.


Global delivery decline

The decision comes after Tesla reported a decline in global vehicle deliveries in the first quarter, marking the first decrease in nearly four years. Facing a slowdown in 2024, Tesla has been challenged by high interest rates impacting consumer spending, particularly in China, where local competitors are offering cheaper alternatives.

Despite these challenges, Tesla remains focused on improving its margins, which have been impacted by frequent price cuts, especially in competitive markets like China. The company's gross profit margin in the fourth quarter was the lowest in over four years.

This isn't the first time Tesla has implemented layoffs, having previously reduced its New York workforce by 4 per cent in February last year.

(With Reuters Inputs)

17:54 IST, April 15th 2024