Amid declining sales, Tesla to sack 10% of global workforce

AUSTIN, Texas: Reuters reported this week that Tesla will make more than 10 percent of its global workforce redundant amid declining sales and an intense electric vehicle (EV) price war.

In a post on X, Tesla CEO Elon Musk said, "About every five years, we need to reorganize and streamline the company for the next phase of growth."

Battery Development Chief Drew Baglino and Vice President for Public Policy Rohan Patel also announced their departures from the EV maker.

After telling executives he had a "super bad feeling" about the economy, Musk last announced a round of redundancies in 2022.

However, filings with U.S. regulators showed that Tesla's headcount still rose from some 100,000 in late 2021 to over 140,000 in late 2023.

Scott Acheychek, CEO of Rex Shares, which manages ETFs with high exposure to Tesla stock, said the layoffs as strategic.

However, Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, said the departures of senior executives Baglino and Patel were "the larger negative signal today" that Tesla was in trouble.

Zach Kirkhorn, Tesla's chief financial officer left the U.S. EV maker earlier this year.

Tesla shares closed at $161.48 or 5.6 percent down on April 15.

In the memo sent to all staff, Musk said, "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."

"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 percent globally," he added.

Dirk Schulze, head of the IG Metall union in Germany, said that a newly elected works council of labor representatives at Tesla's German plant was not informed or consulted before the announcement to staff.

"It is the legal obligation of management not only to inform the works council but to consult with it on how jobs can be secured," Schulze said.

Gartner and Hargreaves Lansdown analysts said that the redundancies were a sign of cost pressures as Tesla invests in new models and artificial intelligence.

In the fourth quarter of 2023, China's BYD briefly surpassed Tesla as the world's largest EV maker.