Tesla plans to lay off more than 10% of its workforce due to declining demand
Tesla, which will report its quarterly results on April 23, reported a drop in car deliveries in the first quarter, the first in almost four years and also below market expectations. Photo: Bloomberg
Tesla will lay off more than 10% of its workforce, technology publication Electrek reported Monday, citing an internal memo, as the largest automaker struggles with weak demand for its electric vehicles in a highly competitive market.
According to the report, in recent months Tesla has asked managers to identify critical team members, suspended some stock awards and canceled annual reviews for some employees.
The world’s largest automaker by market value had 140,473 employees worldwide as of December 2023, according to its latest annual report. The reported cuts will affect approximately 15,000 employees.
Tesla had previously laid off 4% of its workforce in New York in February last year as part of a performance review cycle and before a union campaign was to be launched by its employees.
“As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the business with an eye to cutting costs and increasing productivity,” Electrek said, citing CEO Elon Musk’s statement in the internal memo.
Tesla did not immediately respond to a request for comment.
Tesla, which will report its quarterly results on April 23, reported a drop in car deliveries in the first quarter, the first in almost four years and also below market expectations.
Meanwhile, the company has scrapped plans to produce a low-cost car, abandoning one of Musk’s long-standing goals of making affordable electric cars for the masses.
Tesla shares fell 0.3% in premarket trading on Monday.
After years of rapid sales growth that helped make Tesla the world’s most valuable automaker, the company is bracing for a slowdown in 2024.
The EV maker has been slow to revamp its aging models as high interest rates have sapped consumers’ appetite for expensive items, while rivals in China, the world’s largest car market, roll out cheaper models.
The company wants to strengthen its margins, which have been hit by repeated price cuts.
It posted a gross profit margin of 17.6% in the fourth quarter, the lowest in more than four years.
First print: April 15, 2024 | 4:05 PM IST