Tesla to cut more than 10% of its global staff

Tesla is reportedly cutting more than 10% of its global staff of 140,000.

The cuts for the company, which had nearly doubled its overall headcount since the end of 2020, is just the latest example of the effects of more competition and softer demand in the electric car sector.

An email that CEO Elon Musk sent to staff over the weekend attributed the planned job cuts to the need for “cost reductions and increasing productivity,” according to a report from Reuters. It did not mention anything about the slowdown in demand for electric vehicles or about Tesla sales.

“We have done a throrough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally,” he wrote in the email to Tesla employees. The email, first reported by Electrek, an EV news site, was also reported by Reuters.

On Monday, Musk posted on X: “About every 5 years, we need to reorganize and streamline the company for the next phase of growth,” responding to posts reacting to the layoffs and the departure of two high ranking Tesla executives, Drew Baglino and Rohan Patel.

Tesla just reported a year-over-year decline in sales in the first three months of this year, its first such drop since the height of the pandemic four years ago. In the fourth quarter Tesla briefly lost its title for the leader in global EV sales to Chinese automaker BYD. It recaptured the EV sales title from BYD in the first quarter, despite the drop in sales.

Other automakers, including General Motors and Ford, have also pulled back on their EV production in the face of softer-than-expected demand for those products. Generally EV sales continue to grow on an industrywide basis but not as fast as anticipated. US EV sales were up 40% last year, topping the 1 million mark for the first time.

Tesla opened factories in Germany and Texas in 2022 and last year announced plans for a plant in Mexico. But its headcount growth has slowed greatly recently.

After a 40% increase in staff in 2021, and a 29% increase in 2022, the company posted just under a 10% growth in employees in 2023, according to company filings, bringing global staffing levels to 140,473 as of the end of last year.

This is not the first time that Tesla has cut staff. It announced a 7% cut in staff in 2019, in a statement posted online at that time. And in trimmed about 10% of salaried staff even as it continued to hire hourly staff in 2022.

Those 2022 cuts were confirmed by a public statement from Musk at that time. But neither he nor Tesla have publicly confirmed this latest round of cuts. Tesla, which does not have a public relations staff, did not respond to a request for comment on that report and did not confirm the email.

Shares of Tesla, which were already down 31% so far this year through Friday’s close, fell another 3% in early trading Monday on the job cut report.

Reuters contributed reporting to this story.