Electric vehicle manufacturer Tesla is reducing its global workforce by over 10%, equivalent to at least 14,000 roles, as the company faces declining sales and increased competition in the electric vehicle market.
Tesla CEO Elon Musk announced "the difficult decision" in a memo first reported by the online publication Elektrek. Two senior leaders, battery development chief Drew Baglino and vice president for public policy Rohan Patel, also announced their departures.
Baglino, a Tesla veteran, was one of four members listed alongside Musk on the company's investor relations website as part of the leadership team.
Musk took to his social media platform X to express gratitude to the departing executives. "About every five years, we need to reorganize and streamline the company for the next phase of growth," he said in a post.
Commenting on the job cuts, he wrote: "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."
The job cuts come after a challenging beginning to the year for the electric car manufacturer. Tesla reported approximately 387,000 deliveries to customers in the first quarter of 2024, falling short of market expectations by around 13%. This was Tesla's first decline in deliveries in nearly four years.
In the fourth quarter, Tesla reported a gross profit margin of 17.6%, also marking its lowest figure in over four years.
The company attributed the production challenges to unforeseen factors like attacks on shipping in the Red Sea and an arson incident at its Berlin factory. However, the figures also indicated a weakening in global demand.
Musk has rejected suggestions that his controversial personality has contributed to a decline in sales. Instead, he showed similarly disappointing figures from the Chinese competitor BYD, characterizing it as a "challenging quarter for everyone."
The company is also focused on bolstering its margins, a key indicator of profitability, which have been impacted by frequent price reductions, particularly in China. There, it contends with strong competition from domestic rivals like BYD, which briefly surpassed Tesla as the world's largest electric vehicle manufacturer in the fourth quarter of 2023, as well as newcomer Xiaomi.
Musk last announced such massive job cuts in 2022, expressing concerns about the economy to executives.
Less than a year ago, Tesla's chief financial officer, Zach Kirkhorn, departed from the company, sparking worries regarding succession planning. Despite that, Tesla's headcount surged from approximately 100,000 in late 2021 to over 140,000 by late 2023, according to its annual report.
Tesla did not immediately respond to International Business Times' request for comment.
