Tesla, facing a decline in sales amidst fierce competition in the electric vehicle market, will cut over 10% of its global workforce, according to an internal memo obtained by Reuters on Monday.
With 140,473 employees worldwide as of December 2023, Tesla, the world’s largest automaker by market value, did not specify the exact number of jobs to be affected.
In the memo, CEO Elon Musk emphasized the need to streamline operations and boost productivity in preparation for the company’s future growth. “As part of this effort, we have made the difficult decision to reduce our headcount by more than 10% globally,” Musk stated.
The announcement follows Tesla’s recent report of a drop in global vehicle deliveries in the first quarter, marking the first decline in nearly four years despite price reductions aimed at stimulating demand.
As Tesla braces for a slowdown in 2024 amid market challenges and delayed model updates, the company is focused on improving margins, which have been impacted by frequent price adjustments. In the fourth quarter, Tesla recorded its lowest gross profit margin in over four years at 17.6%.
Additionally, reports indicate that Tesla has scrapped plans for an affordable vehicle, previously anticipated to drive mass-market expansion, further highlighting the company’s strategic shifts amidst evolving market dynamics.
This move comes after Tesla’s prior workforce reduction of 4% in New York last February and precedes its quarterly earnings report scheduled for April 23.
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