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regular-article-logo Monday, 27 May 2024

Tesla to lay off more than 10 per cent of staff globally as sales fall

As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity, says CEO Elon Musk

Reuters Published 15.04.24, 04:51 PM
Representational picture.

Representational picture. File picture.

Tesla will lay off more than 10% of its global workforce, an internal memo seen by Reuters on Monday shows, as it grapples with falling sales amid an intensifying price war for electric vehicles.

The world's largest automaker by market value had 140,473 employees globally as of December 2023, its latest annual report shows. The memo did not say how many jobs would be affected.

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"As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity," Tesla CEO Elon Musk said in the memo.

"As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally," it said.

Tesla did not immediately respond to a request for comment.

Tesla shares were down 0.3% in premarket trading on Monday.

The planned job cuts come after Tesla reported earlier this month that its global vehicle deliveries in the first quarter fell for the first time in nearly four years, as price cuts failed to stir demand.

Tesla, which reports quarterly earnings on April 23, is braced for a slowdown in 2024 after years of rapid sales growth.

The EV maker has been slow to refresh its aging models as high interest rates have sapped consumer appetite for big-ticket items, while rivals in China, the world's largest auto market, are rolling out cheaper models.

Reuters reported this month that Tesla has cancelled a long-promised inexpensive car that investors have been counting on to drive mass market growth.

The company is looking to shore up its margins, which have been dented by repeated price cuts.

It recorded a gross profit margin of 17.6% in the fourth quarter, the lowest in more than four years.

Tesla had previously laid off 4%, opens new tab 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.

Tech publication Electrek first reported, opens new tab the job cuts.

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