Tesla to cut over 10% of global workforce amid sales decline

Tesla workforce reduction: Tesla is set to reduce its global workforce by more than 10 per cent, according to an internal memo obtained by Reuters on Monday. move comes as company faces declining sales and increased competition in electric vehicle market.

With 140,473 employees worldwide as of December 2023, Tesla is restructuring to apt to changing market conditions. While memo did not specify exact number of jobs affected, some employees have alrey been notified of layoffs, sources told Reuters.

Operational efficiency review

​CEO Elon Musk stated in memo that company is undergoing a thorough review to streamline operations and boost productivity.

news follows a challenging period for Tesla, with its stock falling approximately 31 per cent this year. In contrast, tritional automakers like Toyota Motor and General Motors have seen ir shares rise notably amid a slower transition towards electric vehicles.

Tesla's struggles are not unique, as evidenced by energy giant BP cutting over 10 per cent of its workforce in its EV charging business due to slower-than-expected demand. Analysts suggest that Tesla's maturity as a company may contribute to layoffs, signalling management's expectation of continued weak demand.

Global delivery decline

decision comes after Tesla reported a decline in global vehicle deliveries in first quarter, marking first decrease in nearly four years. Facing a slowdown in 2024, Tesla has been challenged by high interest rates impacting consumer spending, particularly in China, where local competitors are offering cheaper alternatives.

Despite se challenges, Tesla remains focused on improving its margins, which have been impacted by frequent price cuts, especially in competitive markets like China. company's gross profit margin in fourth quarter was lowest in over four years.

This isn't first time Tesla has implemented layoffs, having previously reduced its New York workforce by 4 per cent in February last year.

(With Reuters Inputs)