Tesla (TSLA) CEO Elon Musk has permanently dismissed 14,000 Tesla employees in a new round of layoffs representing more than 10% of the company’s workforce, and the move appears to have consequences as Tesla’s stock price has plunged by about 3% since reports of the cost-cutting move started to leak on Sunday.
In an email sent to Tesla employees on April 14, Musk claimed that the global job cuts are the result of the company’s “rapid growth.”
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“Over the years, we have grown rapidly with multiple factories scaling around the globe,” wrote Musk in the email. “With this rapid growth there has been duplication of roles and job functions in certain areas.”
Tesla’s workforce has indeed grown at a rapid pace since 2020 as the company hired 70,000 employees, representing a nearly 50% increase in employee headcount compared to 2019, according to data from Macrotrends. Tesla’s headcount growth has slowed significantly since 2020, however, as the company only hired 29,000 employees in 2022, and just over 12,000 in 2023.
Musk also said in the email that the “difficult decision” was made after a “thorough review of the organization” was conducted for cost reductions as Tesla looks for ways to increase productivity.
“There is nothing I hate more, but it must be done,” wrote Musk. “This will enable us to be lean, innovative and hungry for the next growth phase cycle.”
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The move from Tesla comes after the company reported declining sales for the first time since 2020 in its first-quarter earnings report for 2024.
In the report, Tesla said that it delivered about 387,000 vehicles during the first quarter this year, which is about 100,000 less vehicles than it reported during the previous quarter and an 8.5% decrease of vehicles sold compared to the first quarter in 2023.
“Decline in volumes was partially due to the early phase of the production ramp of the updated Model 3 at our Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin,” read the press release announcing Tesla’s first-quarter earnings for 2024.
Tesla hadn’t delivered under 400,000 vehicles since 2022 and hasn’t seen a year-over-year sales drop since 2020.
After Tesla’s recent layoffs were revealed, the company’s stock price decreased by roughly 3%. Its previous close price was $171.05 per share, it’s trading down 3.4% at about $165 per share at last check in early afternoon trading Monday .
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