Cars

Tesla, drastic cost-cutting plan: up to 14,000 employees leave. Two top executives leave

Tesla's stock down on the stock exchange after announcement

15 April 2024

2' min read

Tesla is cutting its global workforce by more than 10 per cent. In an email to employees reported by Bloomberg news agency, Elon Musk explains that the move is due in some cases to the duplication of roles, but mainly to the need to reduce costs. The company has more than 130,000 employees globally: a 10 per cent cut therefore potentially equates to at least 14,000 redundant employees.

Tesla's stock is heavy on Wall Street after the announcement. "As we prepare the company for our next phase of growth, it is extremely important that we look at every aspect of the company in terms of reducing costs and increasing productivity," the CEO, Elon Musk, wrote in a letter to workers, according to Reuters news agency. "As part of this effort, we have made a thorough review of the organisation and made the difficult decision to reduce our workforce by more than 10 per cent globally," it further reads. Tesla's stock has lost 31% since the beginning of the year, due to a drop in demand for electric cars and fierce competition from Chinese rivals. Recently, Tesla reported the first annual drop in vehicle deliveries since 2020, when Covid-19 curbed production and sales.

Senior Vice President Drew Baglino has left the carmaker, according to people familiar with the matter, and this is the second departure of a senior executive in eight months.

Leaving Vice President Baglino

Meanwhile, according to Bloomberg Agency, Senior Vice President Drew Baglino has resigned from the company. He headed the engineering and technology development of batteries, motors and energy products. The 18-year company veteran shared the stage with Elon Musk at several events, including Tesla's investor day just over a year ago.

Tesla's vice president for public policy and business development, Rohan Patel, also left the carmaker.

Declining deliveries

Tesla reported this month that global vehicle deliveries in the first quarter fell for the first time in almost four years, as price cuts failed to stimulate demand.

Chinese Competition

The electric vehicle manufacturer has been slow to renew its outdated models as high interest rates have weakened consumer appetite for big-ticket items, while rivals in China, the world's largest car market, are launching cheaper models.

Reuters reported this month that Tesla had cancelled a long-promised economy car that investors were counting on to spur mass market growth. Musk denied the report, but did not identify any specific inaccuracies.

Tesla had previously laid off 4% of its workforce in New York in February last year as part of a performance review cycle and before a union campaign was launched by its employees.