Money & The Economy

Tesla Announces Huge Layoffs As Sales Slow

Electric vehicle (EV) maker Tesla sent an internal memo notifying staff that the company would be laying off more than 10% of its global workforce, Reuters reported Monday.

The company had 140,473 employees as of December 2023, and some workers have already been notified that they are to be laid off, according to Reuters. The layoffs follow Tesla’s announcement in early April that its global deliveries declined in the first quarter for the first time in almost four years as demand slowed in the EV market.

“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,” Tesla CEO Elon Musk said in the memo, according to Reuters. “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.”

American automakers have struggled to produce and adopt EVs at the rate that China has, despite the Biden administration offering huge subsidies to the industry, including a $7,500 tax credit per vehicle, contingent on what parts of the vehicle were produced where. Several automakers in the last year have pushed back previous EV goals as consumers decline to buy the product, including Bentley, GM, Ford, Mercedes-Benz and Honda.

The growth in sales for EVs slowed in the first quarter to just 2.7%, compared to an increase of around 47% in the whole of 2023. Sales of new vehicles grew by 5%, leading EV market share to decline from 7.6% at the end of December to 7.1% at the end of the first quarter.

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Tesla retook its spot as the world’s biggest EV seller in the first quarter after briefly losing it at the end of 2023 to Chinese automaker BYD, according to Reuters. First quarter sales for BYD fell 43% compared to the fourth quarter of 2023 but were up 13.4% compared to a year before.

Tesla laid off 4% of its New York workforce in February of last year ahead of a union campaign from employees, according to Reuters. The company’s stock has fallen over 30% since the start of this year.

“Tesla is maturing as a company and isn’t the growth story that it used to be,” Craig Irwin, senior research analyst at Roth Capital, told Reuters. “Layoffs imply management expects weak demand to persist.”

Tesla did not immediately respond to a request to comment from the Daily Caller News Foundation.

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Will Kessler

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