Leading electric vehicle company Tesla is carrying out a more than 10-percent reduction in its workforce worldwide after reaching a historic peak of 140,000 employees in late 2023, an internal memo from company officials says.
A significant number of the layoffs are taking place in the USA and China, Tesla’s two biggest markets, Reuters reports, with Tesla targeting a range of positions in sales, engineering, and other areas according to multiple sources.
Numerous layoffs are occurring at service centers, with technicians and sales staff hit hard by the job reductions. One California location alone saw 140 layoffs, heavily concentrated among engineers, though some other workers also lost their jobs. “Front-of-house staff” at one U.S. location was all laid off at once, according to one source.
Meanwhile, in China, the situation appears to be varying significantly from place to place. Gigafactory Shanghai, where the Model Y and Model 3 EVs are built for the Chinese market and elsewhere, seems to be dropping only “several dozen” jobs from a roster totaling approximately 20,000. However, sales staff in the country will be reduced by more than 10 percent.
Layoffs in Germany are a more uncertain matter given the country’s restrictive labor laws, which make mass firings difficult. Tesla Germany said no employees at Gigafactory Berlin had been notified of job loss yet, a fact confirmed by German labor unions. Tesla Germany said it was still mulling how to carry out ordered cuts, though the German media incorrectly repeated a story that a quarter of its 12,000 workers had already been fired.
Elon Musk’s memo stated that the need for “cost reductions and increasing productivity” is related to preparing “for our next phase of growth.” He said that as a result “we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10 percent globally.” At least some of the firings were effective immediately on Monday of this week.
Two senior executives also left Tesla, including Drew Baglino, the leader of battery development who has been with the company since its inception and whose departure, along with that of Rohan Patel, the automaker’s public policy vice president, was “the larger negative signal today,” according to investment analyst Michael Ashley Schulman.
Musk portrayed the retirements and layoffs as the springboard to more success, declaring “about every five years, we need to reorganize and streamline the company for the next phase of growth.” However, Reuters said dropping sales and stiff price competition were more likely sources for the reductions.
Gross profit margins for Tesla dropped to a four-year low of 17.6 percent in Q4 2023.
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Comments
Tesla operates more like a tech company and less like an automaker.
In the tech industry, there has been this constant churn of simultaneously hiring and laying off to try to achieve a more perfect employee roster. Used to be that if a company is struggling, they reluctantly let go some employees to try to cut cost and survive. Now, even healthy companies view layoffs as a business strategy.
I believe this is traced back mainly to Amazon. They had maybe still do a policy of culling the bottom 10% every year. It causes some interesting backstabbing. Groups of engineers get together and gang up on someone to get them rated badly and fired protecting the group. Almost like one of those tv shows where only one person is a winner, except here it is the 90% that “wins”. Historically though, tech did not. IBM was notorious for never letting people go pre-90’s as was HP, ADI, Intel, … Outsourcing has also been in play much more with high speed internet making it easy to move jobs offshore. Ironically, IBM has been the leader here. Imagine in the 70’s/80’s using an Indian call center with the long distance rates at the time. Now of course your order at McD’s could be taken by someone around the world it is so cheap to have a connection.
Tesla has two really nice cars: Model 3 and Model S. However, like all the Tesla’s, the build quality (fit and finish) is not good. Reliability is so-so. The Model Y is fine if you want a slightly bloated hatch that they call an SUV. Same issues as the 3 and S. The Model X is a joke and only ego maniacs like Musk would do rear door like that. And don’t even get me started on the Cybertruck. 100% pure joke. Build quality is terrible. Reliability has been bad thus far. The only people silly enough to get one are the same people who can’t survive without attention. Not everyone likes or wants: A. A stupid glass roof. B. A huge I-pad stuck to the dash. C. Lack of wipers and blinker stalks. And D. Musk.
If, and that’s a big IF I could tolerate the standard glass roof, I-pad on the dash, no blinker/wiper stalks and lack of proper fint/finish, I could probably make the jump to a Model 3. But all that pales in comparison to Musk and his big mouth. So it’s no wonder they have to cut the work force. Until such time that they remove Musk from the picture and fix some issues, it will be a tough road.
It’s funny that Musk was once the darling of you liberals and now that he owns “X”, which allows free speech, he is the most despised man in America, maybe the world….lol #FreeSpeechLives
I always thought musk was a sociopath. Always. Nothing has changed except maybe a few more people have figured it out.
Sorry Cowboy, Musk has never been a darling for me in any way.
You right-wing nuts always get things confused.
I love it when people equate right wing rhetoric with free speech and boast about it.
I’ll support anyone that allows free speech. And Musk is at the top of the list.
Time will tell. I do think pretty brazen at a time the stock is down what 50% almost, and he just laid off 10% with an email, that he is asking for his tiny 50B payout be re-instated. I expect the cult will in fact re-instate it too.
Even with Musk gone problem would persist
I heard most of the layoffs are from the team that designed the Cyber Truck.
Welcome to the car business Elon!
But don’t worry. GM wasted.. I meant invested…. Billions to crash and recall into the EV market at the worst time. Economic factors aside we all knew this in 2019 yet got hushed by the EV fanatics based on lies. Even 6 months ago those EV pumpers were vocal here still citing the same BS, where are they now?
Was silly of GM to convince themselves they could just skip hybrids lol. Like insert the Jackie Chan “wtf!?” Meme
“But China. More China…must have China. Moar China!! US who???”
And now China is like “GM who?” Who would have thought putting all your eggs into one basket was a bad idea?
I.C.E. forever
Case closed.
Really do not what to think of Musk. Glad that he bought X. But think that he is going the Tesla in the wrong way.
I think PR is a big part of the problem.
Way back in the 1920s, Henry Ford decided it was a good idea to put down the Jewish community as part of a global problem. In what universe should a business person think it a great idea to slander potential consumers of your product, let alone being a good human being.
A big part of this problem is that many have figured out he is a total sociopath. There is another common term for him that I am not sure I can say on here. I will not consider buying a car from someone who is an arrogant horrible human being. He is a visionary, but a complete jerk.
B…b…but the EV fanboys keep insisting that Teslas price cuts are because they are so established in their supply chains they can afford to cut prices and stay super profitable (not because they have no choice and can’t fall back on ICE models because the wealthy car buyers have now gotten their cars and the middle class just isn’t interested and are buying Chevy Trax instead. How can this be???