Electric car giant Tesla lays off more than 10% of its workforce

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Tesla plans to reduce its global electric vehicle workforce by over 10%.

In a memo initially disclosed by news website Electrek, billionaire owner Elon Musk informed employees that while it was a decision he despised, it was necessary.

According to its latest annual report, the world’s largest vehicle-maker by market value had 140,473 employees worldwide as of December.

Tesla has yet to respond to the BBC’s request for comment.

“We have done a thorough review of the organisation and made the difficult decision to reduce our headcount by more than 10% globally,” said the email from Mr Musk.

“There is nothing I hate more, but it must be done. This will enable us to be lean, innovative and hungry for the next growth phase cycle.”

A Tesla employee who had been told he was being let go told the BBC he had subsequently been locked out of his emails, as had all other staff being laid off.

One of the executive team, Andrew “Drew” Baglino, said in a post on X (formerly Twitter) on Monday he had made the “difficult decision” to leave the firm after 18 years.

Mr. Baglino had been serving as the senior vice president of Tesla’s powertrain and energy engineering team since 2019, as per information available on Tesla’s website.

Another executive overseeing public policy and business development, Rohan Patel, is also preparing to depart. Patel personally expressed gratitude to Mr. Musk for providing him with opportunities and enabling him to spearhead significant initiatives within the company. He highlighted the resilience and resourcefulness of the broader Tesla team, considering it a distinguishing factor of the company’s work environment.

Their resignations are seen as a sign that Tesla’s significant growth phase is encountering substantial challenges, according to Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors. Schulman views this development as a more substantial negative signal compared to the announcement of job cuts.

However, analysts from Gartner and Hargreaves Lansdown interpret the layoffs as indicative of cost pressures stemming from the company’s investments in new vehicle models and artificial intelligence.

Tesla, a prominent electric vehicle (EV) manufacturer, has faced delays in updating its aging vehicle lineup, aggravated by diminished consumer interest due to high interest rates affecting the market for expensive purchases.

Moreover, competition from China, with the emergence of affordable EVs, has intensified pressure on Tesla’s market share.

The company is scheduled to release its quarterly earnings later this month, but it has already reported a decrease in vehicle deliveries in the first quarter, marking the first decline in nearly four years and falling short of market expectations. Analysts have characterized these results as turbulent.

Last month, Tesla scaled back production at the Gigafactory in Shanghai, and recently, it informed Cybertruck production line employees in Austin of shorter shifts.

Tesla is beginning to experience the repercussions of waning demand for electric vehicles (EVs).

Despite recent reports suggesting the abandonment of plans to produce an affordable car, a long-standing objective of Elon Musk, he has refuted these claims.

Tesla shares were down 0.8% in premarket trading on Monday.