Tesla is set to lay off over 10% of its global workforce, as per an internal memo seen by Reuters. This move comes as the company faces declining sales amidst a fierce price war in the electric vehicle market.
According to Tesla’s latest annual report, the company had 140,473 employees worldwide as of December 2023.
The memo did not specify the exact number of jobs that would be affected.
In the memo, Tesla CEO Elon Musk mentioned, “As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity.”
He added, “As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally.”
Tesla has not yet responded to requests for comment.
Tesla’s shares were down 0.3% in pre-market trading on Monday.
These planned job cuts follow Tesla’s report in April that its global vehicle deliveries in the first quarter experienced a decline for the first time in nearly four years despite price cuts.
Tesla, which is scheduled to report quarterly earnings on April 23, is preparing for a slowdown in 2024 after years of rapid sales growth.
The company has been slow in refreshing its older models, while high interest rates have dampened consumer demand for expensive items. In China, Tesla’s major market, competitors are introducing more affordable models.
According to Reuters, Tesla has abandoned plans for a low-cost car that investors were expecting to drive mass market growth.
Tesla is focusing on improving its margins, which have been impacted by frequent price reductions. In the fourth quarter, the company recorded a gross profit margin of 17.6%, the lowest in over four years.
Earlier in February 2023, Tesla had laid off 4% of its New York workforce as part of a performance review process, before employees were set to launch a union campaign.
The job cuts were first reported by tech publication Electrek.
