Tesla lays off over 10% of its workforce

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Key Takeaways

  • Tesla is laying off 'more than 10%' of its workforce.
  • The company says the job cuts are needed for the 'next phase of growth.'
  • The move comes after a rare fall in sales.

Tesla is laying off  “more than 10%” of its workforce, according to a leaked email notice from Elon Musk.

The company CEO told staff the job cuts were necessary as there had been “duplication of roles” while the company grew quickly, according to Electrek‘s copy of the memo. It was important to trim costs and boost productivity as Tesla entered its “next phase of growth,” Musk said.

Rumors had surfaced of impending Tesla layoffs, with some insiders claiming the reductions would climb as high as 20%. The official figures suggest the EV maker may slash 14,000 or more  positions, but it’s not clear which teams will be the most affected.

The move comes just days after Tesla reported a tough first quarter. The brand delivered a relatively modest 386,810 cars, or its first quarterly drop in deliveries for nearly four years. Musk pinned the shortfall on a combination of obstacles that included shipping diversions and arson.

However, the layoffs also come as Tesla is reducing production capacity amid cooling demand. The redesigned Model 3 only just launched in North America during the quarter, and reports surfaced of shrinking Cybertruck production as real sales failed to match early interest.

Critics have also raised concerns that Musk may be distracted by X (formerly Twitter).

Tesla will share its earnings April 23rd. Analysts still expect the company to turn a profit of 50 cents per share, but that would represent a steep drop from 85 cents in the year-ago quarter.

Layoffs at Tesla aren’t new, and the latest reductions follow waves of similar cuts at competitors like Lucid Motors and Rivian. They also come alongside a slowdown in (still-brisk) EV sales that has seen brands like Ford shift some attention back to hybrids. All the same, the decision suggests even the long-time market leader isn’t immune to market challenges.