Elon Musk has reportedly announced a round of mass layoffs at Tesla, according to Electrek. In an email reportedly sent to employees, the Tesla CEO announced that the carmaker would cut “more than 10%” of its global workforce. Last year, Tesla reported having just over 140,000 workers, so such a reduction would mean at least 14,000 Tesla employees will be laid off.
Fast Company has reached out to Tesla for comment.
In the email, Musk said rapid growth at its multiple factories in the last few years has led to some areas seeing the duplication of job functions and roles. “As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” Musk’s email continued. “As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally.”
Tesla’s job cuts come at a time of increasing turmoil and challenges at the company. As Bloomberg notes, the company’s stock (ticker: TSLA) is down over 31% this year amid slowing sales, particularly as the company faces stiffer competition in China.
In addition, Musk’s antics on X have caused some investors to worry that the CEO is hurting his own carmaker’s brand. And then there is the launch of Tesla’s latest vehicle, the Cybertruck, which has received a wide array of scorn and ridicule, further diluting the brand’s reputation.
In the email to employees, Musk 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.” This isn’t the first time Tesla has announced mass layoffs. Back in 2018, the company laid off 9% of its workforce, and in 2022, Tesla laid off 10% of salaried employees.
After news of the layoffs broke, Tesla’s stock currently remains relatively unmoved. At the time of this writing, shares are down just over half a percent in premarket trading to $170.11. But this relatively minor reaction in the stock price might not actually be a good sign. Many times after a company announces major layoffs, its stock price actually increases, suggesting investors believe the only challenges a company faces are overhead costs.
Given that Tesla’s stock is so far little moved, it could mean investors fear that Tesla has much more work to do than simply reducing labor costs if it is to turn itself around and get sales moving in the right direction again. Tesla’s next earnings report is due on April 23, at which time the company will likely try to reassure investors about its plans for the wider challenges it faces.
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