Tesla will lay off more than 10% of its workforce, technology publication Electrek reported Monday, citing an internal memo, as the leading automaker struggles with weak demand for its electric vehicles in a highly competitive market.
In recent months, Tesla has asked managers to identify critical team members, suspended some stock awards and canceled annual evaluations for some employees, according to the report.
The world’s largest automaker by market value had 140,473 employees worldwide as of December 2023, according to its latest annual report. The announced cuts will affect approximately 15,000 workers.
Tesla had already laid off 4% of its New York workforce in February last year as part of a performance review cycle and before a union campaign was launched by its employees.
“As we prepare the company for our next phase of growth, it is extremely important to examine all aspects of the business to reduce costs and increase productivity,” Electrek reported, citing CEO Elon Musk’s statement in the internal note.
Tesla did not immediately respond to a request for comment.
Tesla, which is due to report quarterly results on April 23, reported a drop in vehicle deliveries in the first quarter, the first in almost four years and also lower than market expectations.
Meanwhile, the company abandoned plans to produce an inexpensive car, abandoning one of Musk’s long-held goals of making affordable electric vehicles for the masses.
Shares of Tesla were down 0.3% Monday in premarket trading.
After years of rapid sales growth that helped make Tesla the world’s most valuable automaker, the company is bracing for a slowdown in 2024.
The electric vehicle 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, launch cheaper models.
The company is seeking to consolidate 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.
First publication: April 15, 2024 | 4:05 p.m. STI