Tesla announces to lay off more than 10% of its global workforce, as its operating profit margins decline terribly in the third quarter. It has already implemented workforce cuts and is reported to hit high performers as well.
According to sources, Elon Mask, CEO of American electric car giant Tesla has sent an internal memo to employees announcing to cut off 10% of its global workforce to reduce cost and increase productivity. The news about Tesla’s layoff has been circulating in the market since February, when the company postponed performance evaluations for some employees. The recent layoff is expected to affect around 14,000 workers, working across the global organization that has operations in the United States, China and Europe.
The lay off is reported to slash some departments by 20%, even hitting top performers. The layoffs are attributed to poor financial performance. Tesla’s operating profit margin narrows over the past several quarters, as a result of an EV price war that has persisted for over a year. The company delivered a record 1.81 million vehicles in 2023. The price cuts across Tesla’s model lineup, however, hits its margins, causing profits to drop terribly.
The shakeup has hit high performers, according to news sources. Many talented employees are laid off who were working on projects that have fallen lower on Tesla’s priority list. Tesla’s powertrain and energy executive Drew Baglino and public policy and business development executive Rohan Patel have already exited from the company. Baglino, after serving for 18 years in Tesla decided to leave the company because of major systemic changes at the company.
From adjusting work schedules to announcing layoffs, Tesla has been making new changes in its operational management to reduce cost and increase productivity for the next growth phase. CEO Elon Musk said, “It is extremely important to examine all aspects of the company to reduce costs and increase productivity. There is nothing I dislike more than layoffs, but it must be done. This will enable us to be lean, innovative, and eager for the next growth cycle.”
