Tesla will reduce over 10% global headcount as it awaits the next growth driver

Peng Chen, DIGITIMES Asia, Taipei 0

Credit: AFP

Citing costs and productivity, Tesla informed its employees on April 15 that it plans to cut 10% of its workforce worldwide. The news came after Tesla reported a decreased delivery for the first quarter of 2024 amid soft EV demand.

The announcement meant at least 14,000 Tesla employees will lose their jobs as the company had more than 140,000 personnel as of the end of 2023, The Wall Street Journal reported.

Shortly after the news broke, two senior Tesla executives, Drew Baglino and Rohan Patel, said they were leaving the company. Baglino, a senior vice president, had been with Tesla for 18 years and headed the powertrain and energy engineering. Patel was Tesla's vice president for public policy.

According to Electrek, Tesla CEO Elon Musk said in an email to Tesla employees that it is essential to "look at every aspect of the company for cost reductions and increasing productivity" as the company prepares for future growth.

He thanked those who are departing Tesla and reminded people remaining that they have difficult jobs ahead because the company is developing some of the most revolutionary technologies in auto, energy, and artificial intelligence.

In a comment on an X post on Monday, Musk said Tesla needs to reorganize and streamline itself about every five years to prepare for the next growth phase.

Source: Tesla, compiled by DIGITIMES Asia, April 2024

Tesla is facing mounting difficulties in the global EV market. The company delivered 386,810 vehicles for the first three months of 2024, an 8.5% decline from 2023. The EV maker said in January that it is in between two major growth waves. The first is the adoption of the Model 3/Y platform, and the second wave is expected to arrive when Tesla launches the next-generation vehicle platform.

The company's next-generation projects have been expected to encompass a more affordable vehicle model and a robotaxi. Reuters reported in early April that Tesla had canceled the former, which will likely cost around US$25,000, while Musk said the media outlet was "lying." He did not provide other details and later said Tesla will reveal its robotaxi in August.

In China, which hosts Tesla's biggest product base, the company has encountered more challenges from rising local automakers, including tech giant Xiaomi. According to Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), Tesla sold 221,000 cars in the first quarter of 2024, down by 4% from 2023. BYD, the largest Chinese EV maker, delivered 624,000 vehicles in the same period, up 14% year-on-year.