'Tesla Faces Electric Vehicle Sales Slump, Cuts 10% of Global Workforce'

Plan to Cut 14,000 Jobs
Musk: "Next Step Leap Through Cost Reduction and Productivity Increase"

Struggling with sluggish electric vehicle sales, Tesla is cutting 10% of its global workforce.

Elon Musk, Tesla's Chief Executive Officer (CEO), stated in an email to employees on the 15th (local time), "After a thorough organizational review, we have made the difficult decision to reduce our global headcount by more than 10%."

He added, "There is nothing more unpleasant than this, but it is necessary," and said, "This will streamline our organization and enable us to leap into the next growth phase with innovation." He explained that the workforce reduction aims to cut costs and increase productivity.

[Image source=Yonhap News]

According to Tesla's annual business report, as of the end of 2023, the company had 140,000 employees worldwide. More than 14,000 employees, which is 10% of the total workforce, are subject to layoffs. Drew Baglino, a senior Tesla executive, also wrote on social media platform X (formerly Twitter) that he made the difficult decision to leave Tesla.

The main reason Tesla is undertaking workforce restructuring is the poor performance in electric vehicle sales. Tesla's vehicle deliveries in the first quarter of this year showed a decline for the first time in four years. According to Tesla, vehicle deliveries from January to March this year totaled 386,810 units, down 8.5% compared to the same period last year. This figure fell significantly short of the expert forecast of 457,000 units compiled by market research firm FactSet and marked the first decrease in four years since the COVID-19 pandemic began in 2020.

Although the electric vehicle market growth has slowed due to high inflation and high interest rates, Tesla is being evaluated as rapidly losing market dominance compared to competitors expanding their businesses. For example, China's BYD sold 300,000 electric vehicles in the first quarter of this year, a 13% increase compared to the same period last year.

As pessimism about Tesla grows, the company's stock price has fallen 31% just this year.

CEO Musk emphasized that many challenges remain for Tesla. In his email, he stated, "Tesla is developing the most innovative technologies in the fields of automobiles, energy, and artificial intelligence (AI)," and noted that the employees remaining at Tesla face difficult tasks.

Amid rising concerns about Tesla's innovation and growth potential, Musk recently announced plans to unveil the RoboTaxi in August. This is the first time he has revealed a product launch date since mentioning RoboTaxi development in 2019. However, there are forecasts that this will not be enough to serve as a turnaround card to dispel concerns about Tesla.

Adam Jones, an analyst at Morgan Stanley, said, "We are awaiting Tesla's substantial RoboTaxi prototype unveiling this summer, but caution is required regarding the timeline for commercializing a fully autonomous taxi service."

Meanwhile, Tesla's stock price closed down 5.59% in the New York stock market on the day. Tesla is scheduled to announce its first-quarter earnings on the 23rd.