Tesla to cut 10% of staff following disappointing sales quarter

Tesla is set to reduce its workforce by approximately 10% following a disappointing first quarter in sales, as reported by various news outlets on Monday.

Elon Musk, the CEO of Tesla, communicated the decision through a memo to the employees, indicating that the layoffs could impact around 14,000 of the company’s 140,473 workers as of the end of the previous year. The memo highlighted the necessity for cost-cutting and enhanced productivity as the company gears up for future growth, according to reports from The New York Times and CNBC. This news initially surfaced on the electric vehicle news site Electrek.

In related news on Monday, two high-ranking Tesla executives disclosed their departures from the company via posts on the social media platform X. Andrew Baglino, the senior vice president of powertrain and energy engineering, announced his departure after 18 years at Tesla. Rohan Patel, who served as the senior global director of public policy and business development, also declared his exit after an eight-year tenure.

Baglino, a long-time engineer who eventually became the chief technology officer, expressed that leaving Tesla was a tough choice. He shared his intentions to spend more time with his family and young children, though he admitted to finding it challenging to remain inactive for extended periods.

Elon Musk responded to Baglino’s announcement with gratitude, acknowledging his significant contributions to the company.

Following these announcements, Tesla’s stock fell by 4.8% on Monday afternoon. The company’s shares have seen a decline of about one-third of their value this year amidst slowing electric vehicle sales and intensified competition.

Tesla reported a sharp drop in vehicle deliveries for the first quarter, with 386,810 vehicles delivered, nearly 9% lower than the 423,000 sold in the same period last year. The company has been adjusting its pricing strategy, slashing prices by up to $20,000 on some models to navigate through growing competition and a slowdown in demand. These price reductions have also affected the resale values of used electric vehicles and have negatively impacted Tesla’s profit margins.

Additionally, Tesla has plans to unveil an autonomous robotaxi at an upcoming event in August.