Tesla cuts workforce by over 10% following decline in sales

“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” : in an email sent to the media Electrek And Bloombergthe American billionaire and CEO of Tesla, Elon Musk, announced that he would separate from “more than 10%” of its payroll. Job cuts which could affect 14,000 people, the company having declared at the end of 2023 to have 140,743 employees.

Two departing development executives

In his email, Elon Musk specifies that Tesla has “experienced rapid growth with several factories located around the world”which would have led to a “duplication of professional roles and functions in certain areas”. The letter does not specify the types of positions affected, nor the geographic areas impacted globally, even if certain employees in California and Texas have already been informed of their dismissal.

Following the announcement, two senior executives at the company decided to leave the company: Drew Baglino, vice president of battery development, and Rohan Patel, vice president of public policy and business development.

Vehicle sales in free fall

The announcement of the mass layoffs comes two weeks after Tesla reported, for the first time, a year-over-year decline in sales. In the first quarter, the automaker said it sold 386,810 vehicles, or 20% less than in the first quarter of 2023. The firm then warned investors that growth could be “significantly lower” to the stated objective of 50% growth per year.

Tesla had attributed responsibility for part of this drop in sales to the arson of the electrical network at its Berlin factory, and to disruptions caused by Houthi rebels in the Red Sea. Apart from these exogenous reasons, the firm abandoned its project to build a low-cost vehicle – around 25,000 euros – which was to help increase its sales from the end of 2025.

Its CEO is now banking (again) on robot taxis, vehicles causing numerous controversies in terms of safety and engineering. Elon Musk has mentioned plans for autonomous taxis many times in the past, without it materializing. Finally, Tesla has had to face price competition on electric cars in recent years, particularly from the Chinese company BYD.