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Tesla plans to lay off more than 10% of its global workforce, an internal memo seen by Reuters revealed on Monday, as it deals with declining sales and increasing price competition for electric vehicles. Ta.
The world's largest automaker by market value had 140,473 employees worldwide as of December 2023, according to its latest annual report. The memo did not say how many jobs would be affected.
Some employees in California and Texas have already received notice of layoffs, people familiar with the matter told Reuters. Due to the sensitive nature of the topic, he requested anonymity.
“As we prepare the company for its next phase of growth, we are looking at every aspect of the company to reduce costs and improve productivity,” Tesla CEO Elon Musk said in a memo. That is very important.”
“As part of this effort, we have overhauled our organization and made the difficult decision to reduce our workforce by more than 10% worldwide,” the company said.
Tesla did not immediately respond to a request for comment.
The company's shares fell 1.3% in pre-market trading.
The company's stock price has fallen about 31% so far this year, compared to Toyota Motor Corp. and General Motors Corp., whose shares have risen 45% and 20%, respectively, thanks to a slow consumer transition away from traditional internal combustion engine cars. This is below the performance of traditional automakers such as Motors.
Energy giant BP also cut more than a tenth of its workforce at its EV charging business after bets on rapid growth in commercial EV fleets didn't pay off, Reuters reported on Monday, adding to the broader slowdown in EV demand. It highlighted that it was having an impact.
“Tesla is maturing as a company and it's not the growth story it used to be,” said Craig Irwin, senior research analyst at Roth Capital.
“The layoffs suggest that management expects demand to remain weak.”
Still, Pedro Pacheco, Gartner's vice president of research and automotive, said the job cuts come as the company cuts costs ahead of new model launches as sales slow from strong growth driven by the launch of the Model Y. He said that there is a possibility that it is just a manifestation of what will happen. And model 3.
Tesla reported this month that its first-quarter global car deliveries fell for the first time in nearly four years as price cuts failed to stimulate demand.
While rival companies are introducing lower-priced models in China, the world's largest automobile market, the company has been slow to update its aging models as high interest rates reduce consumer appetite for expensive products. .
Reuters reported this month that Tesla had scrapped its long-promised plans for low-cost cars that investors had hoped would spur mass-market growth. Musk denied the report, but did not specify any specific inaccuracies.
The company is trying to shore up profit margins that have been depressed by repeated price cuts, but it faces stiff competition, especially in China, from local rivals including market leader BYD, which temporarily cut off the U.S. company in the fourth quarter. became the world's largest EV manufacturer. quarter, and new entrant Xiaomi.
Tesla posted a gross profit margin of 17.6% in the fourth quarter, the lowest level in four years.
Tesla laid off 4% of its workforce in New York in February last year as part of a performance review cycle and before employees began a union campaign.
The latest layoffs were first reported by technology publication Electrek.
