Tesla is facing a workforce reduction of over 10% globally, according to an email sent to staff by CEO Elon Musk.
The cut, potentially impacting more than 14,000 employees, as Tesla finished 2023 with over 140,000 staff, comes amid a slowdown in electric vehicle demand and a need to control costs.
This news follows Tesla’s recent announcement of its first year-over-year sales decline in three years, highlighting a broader cooling of the electric vehicle market. The company has also warned investors of potentially lower-than-expected sales growth in 2024, falling short of its usual 50% annual growth target.
Tesla’s product cycle is also in a transitional phase. The highly anticipated Cybertruck is just entering production, while the popular Model Y is nearing its fourth year without major updates.
Elon Musk, in his email, justified the layoffs as a necessary step towards “increasing productivity” and eliminating “duplication of roles” that came up during Tesla’s rapid growth. These cuts, according to Elon Musk, will position Tesla for “the next growth phase cycle” by making the company “lean, innovative and hungry.”
Despite record-breaking electric vehicle deliveries in 2023 at 1.8 million units, Tesla has been struggling to maintain momentum. The company faced the need to slash prices on popular models to mitigate the impact of high-interest rates and increased competition.
According to recent reports, the plans to launch an affordable electric vehicle (EV) with a starting price of $25,000 have been delayed. Instead, the company is now focused on developing a new platform for a rumoured robotaxi service, which is expected to make its debut in August 2024.
While specific details about the new platform and the robotaxi service are still scarce, it is believed that the platform will be designed to support autonomous driving features and enable ride-sharing services.
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