Elon Musk announces layoffs in memo to staff

Tesla told staff it is laying off more than 10 per cent of its global workforce, an internal memo seen by Reuters shows, as it grapples with falling sales and an intensifying price war for electric vehicles (EVs).

In response to commentary on the news on X, Tesla CEO Elon Musk posted: “About every five years, we need to reorganise and streamline the company for the next phase of growth.”

Shares of Tesla fell 5.3 per cent on Monday on Wall Street, hours after news of the layoffs and departures broke. Shares of Tesla have lost about one-third of their value so far this year as sales of electric vehicles soften.

Musk last announced a round of job cuts in 2022, after telling executives he had a “super bad feeling” about the economy. Tesla never outlined how many jobs it cut in 2022, but its employee headcount has risen from around 100,000 in late 2021 to over 140,000 in late 2023, according to SEC filings.

Monday’s dismissals were effective immediately, according to a copy of the email sent to laid off employees seen by Reuters.

Also on Monday, Tesla’s senior vice president Drew Baglino, in charge of battery development, and Rohan Patel, vice-president for public policy and business development, both announced their exits from the company on X.

Baglino was one of four members in Tesla’s leadership team listed on the company’s investor relations website that includes CEO Elon Musk. Musk thanked both executives for their work in a response to their respective notes on X.

Scott Acheychek, CEO of Rex Shares – who manage ETFs with high exposure to Tesla stock – described the headcount reductions as strategic, pointing to Tesla’s overall year-on-year headcount increase as a sign that the carmaker was still in a phase of growth.