The leading electric vehicle manufacturer, Tesla is set to lay off more than 10% of its workforce, according to a report from tech publication Electrek.
This decision comes as the company struggles with soft demand for its electric vehicles in an increasingly competitive market.
According to the report, Tesla has been taking various measures to streamline its operations in recent months. Managers have been tasked with identifying critical team members, some stock rewards have been paused, and annual reviews for certain employees have been cancelled.
The reported layoffs are expected to affect approximately 15,000 workers. Tesla, which boasted 1,40,473 employees globally as of December 2023, as per its latest annual report is undergoing this restructuring as it prepares for its next phase of growth.
The move follows a previous round of layoffs in February last year, where 4% of Tesla’s New York workforce was let go as part of a performance review cycle.
In an internal memo cited by Electrek, CEO Elon Musk highlighted the importance of cost reductions and increasing productivity as the company gears up for the future. Tesla has yet to respond to requests for comments on the reported layoffs.
Tesla's upcoming quarterly earnings report, scheduled for April 23, comes at a time when the company faces challenges in its core business.
The first quarter saw a decline in vehicle deliveries, marking the first such downturn in nearly four years and falling below market expectations.
Tesla has abandoned plans to produce an affordable car, a departure from Elon Musk's longstanding goal of making electric vehicles accessible to the masses.
Amidst these challenges, Tesla's shares were down 0.3% in premarket trading on Monday. The company, once known for its rapid sales growth, is now bracing for a slowdown in 2024.
Hindered by high interest rates affecting consumer spending and increasing competition, Tesla aims to shore up its margins, which have been impacted by repeated price cuts.
In the fourth quarter, Tesla recorded its lowest gross profit margin in over four years at 17.6%.
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