Tesla Inc. is reducing jobs by more than 10%, part of a global retrenchment extending all the way into its executive ranks as the carmaker struggles with slowing demand for electric vehicles.
Chief Executive Officer Elon Musk revealed the job cuts in an email to staff, citing duplication of roles and the need to reduce costs. If the dismissals apply companywide, they would amount to more than 14,000 employees.
The email was earlier reported by Electrek, an online news site, and Handelsblatt, a German business newspaper.
Alongside the layoffs, Senior Vice President Drew Baglino and Rohan Patel, vice president of public policy and business development, have departed, according to people familiar with the matter who asked not to be identified because the information is private. Baglino, an 18-year company veteran who was one of just four named executive officers, resigned from the company, one of the people said.
"I made the difficult decision to move on from Tesla after 18 years," Baglino said in a post on the social platform X, formerly known as Twitter. Baglino is one of only three managers besides Musk listed as a top executive on the company's website. His longevity was unusual at a company known for high management turnover.
Tesla reported vehicle deliveries early this month that missed expectations by a wide margin, posting its first quarterly decline in four years. Several analysts are bracing for the electric-vehicle maker's sales to potentially shrink for the year, citing slow output of its newest model -- the Cybertruck -- and a lull in new products.
Musk has not outlined a plan to reverse a decline in car sales, and he appears focused on long-shot ventures such as a self-driving taxi, rather than new models that would help Tesla compete with cars being introduced by established carmakers and new rivals from China.
"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," Musk wrote in the memo, which was also seen by Bloomberg News. "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. There is nothing I hate more, but it must be done."
Tesla regularly culls its workforce to remove employees whose performance managers consider weak, but the numbers are typically smaller. "This is something Elon and Tesla have consistently done throughout his career," said Scott Acheychek, CEO of REX Shares, which offers funds investors use to bet on or against Tesla's stock. "Ten percent is pretty big," Acheychek said.
Tesla ended last year with 140,473 employees, almost double its total three years earlier. It's been ramping up output at two plants -- one in Austin, Texas, and the other outside Berlin -- that started cranking out Model Y sport utility vehicles in early 2022. The company started lowering prices across its lineup as those facilities reached higher volumes.
"Over the years, we have grown rapidly with multiple factories scaling around the globe," Musk wrote in the email. "With this rapid growth there has been duplication of roles and job functions in certain areas."
In its most recent major workforce reduction, Tesla eliminated about 10% of salaried workers in mid-2022.
Tesla staff have been fearing potential job cuts since early this year, when managers were asked to affirm whether each of their employees' positions is critical. Some salaried employees also were told late last year that the company wasn't going to be offering merit-based equity awards as part of annual performance reviews.
"We just have to chase down every penny possible," Chief Financial Officer Vaibhav Taneja said during Tesla's most recent earnings call on Jan. 24. "We have a strong team which is hyper-focused on this."
The vehicle sales slowdown Tesla has felt of late has been widespread. China's BYD Co. delivered just 300,114 battery-electric vehicles in the first quarter, down 43% from the final three months of last year, when it briefly pulled ahead as the world's top electric vehicle seller. Manufacturers including Volkswagen AG, General Motors Co. and Ford Motor Co. have delayed, dialed back or altogether scrapped electric-vehicle projects as consumers balk at sticker prices and a dearth of charging stations.
Other rivals such as BYD of China, BMW of Germany, and Kia and Hyundai of South Korea reported increases in electric-vehicle sales for the same period, suggesting that slower overall demand for battery-powered models was not the only explanation for Tesla's problems.
Musk's many other ventures, and his penchant for making polarizing political statements, have raised questions about how focused he remains on managing Tesla. Wall Street is increasingly concerned about the company: Tesla's share price has lost about one-third of its value this year.
Tesla shares fell $9.57, or 5.6%, to close Monday at $161.48.
The company cut prices significantly over the course of 2023 to increase demand, which has reduced the profit Tesla makes on each car. Last week, Tesla reduced the price of its most advanced driver-assistance software to $99 a month from $199. But price cuts appear to be losing their effectiveness. Tesla will announce its financial results for the first quarter on April 23.
Established companies are closing the gap with Tesla on battery technology and have been building new assembly lines to achieve the cost savings made possible by mass production. Honda plans to begin producing electric vehicles at a factory in Marysville, Ohio, next year.
Hyundai will begin producing electric cars at a new factory in Georgia in October, José Muñoz, the president and global chief operating officer of Hyundai Motor, said in an interview last month. Hyundai will also begin allowing customers to buy cars on Amazon, an answer to Tesla's practice of selling cars online.
Muñoz said that customers had been willing to pay more for Hyundai electric cars than they would for comparable Teslas. "At the beginning, Tesla was premium," he said. "Now we're premium."
Information for this article was contributed by Ed Ludlow and Dana Hull of Bloomberg News and Jack Ewing and Jason Karaian of The New York Times.