Tesla's management on Monday told employees that recent layoffs, which led to a 20% reduction in some departments and even hit high-performing employees, were due to poor financial performance, citing a source familiar with the matter, TechCrunch reported, UNN reported.
Details
The layoffs were announced just a week before Tesla was to report its first-quarter earnings.
"This step was taken because Tesla's profit margin has shrunk over the past few quarters as a result of the price war for electric vehicles that has lasted at least a year. In 2023, the company delivered a record 1.81 million cars. However, its profits fell after Tesla repeatedly cut prices in an attempt to increase sales and undermine competition," the publication notes.
Tesla has informed employees that more than 10%, or about 14,000 workers, will be laid off across its global organization, which has offices in the US, Europe, and China. According to an internal email from CEO Elon Musk, reviewed by TechCrunch, the layoffs, which affected employees across all departments and seniority levels, were made to cut costs and improve productivity to prepare for the next phase of growth.
According to two sources who spoke to TechCrunch on condition of anonymity, many of the laid-off employees were high performers. One source expressed shock at the layoffs of so many talented employees and noted that many of those affected were working on projects that were lower on Tesla's priority list. The source declined to specify which projects these were.
According to sources, some departments have seen a 10% cut, as noted in a company-wide email. One manager told TechCrunch that 20% of his staff had been laid off.
"I lost 20% of my team and some really good players," they said.
The shock also comes as Musk continues to change the company's trajectory toward fully self-driving cars. Tesla recently abandoned plans to create a cheaper electric car with a retail price starting at around $25,000, opting instead to use the basic platform being developed to power the company's proposed RoboCar, which Musk said would debut on August 8.
Top managers also left. Two senior executives - Drew Baglino, Tesla's senior vice president of powertrain and energy, and Rohan Patel, vice president of public policy and business development - also left the company.
Patel told TechCrunch that he decided to leave Tesla on Sunday evening due to "major overall changes" at the company. Patel, who has been regularly communicating with Tesla customers and fans on the X in recent months, declined to go into details. In a statement, he said that "I'd rather not speculate." "Tesla will be stronger than ever, and change is good," he added.
Baglino told TechCrunch that after 18 years, it was time to leave Tesla. "I'm happy with the impact I've had, my leadership team is strong, the energy businesses I'm responsible for are thriving, etc." he wrote in a statement to TechCrunch.
Baglino's departure comes just a few months after Tesla's previous CFO, Zachary Kirkhorn, resigned.
Addendum
In January, Musk wrote in X that he would like to have control of about 25% of Tesla's votes to focus more fully on the company, rather than his other companies, and help the electric car maker become a leader in artificial intelligence and robotics.