Tesla, led by CEO Elon Musk, is reducing its global workforce by more than 10%, according to an internal memo.
Musk mentioned the need for occasional restructuring every five years to align with future growth plans.
Several senior figures, including Drew Baglino, head of battery development, and Rohan Patel, vice president of public policy, are leaving, causing concern among investors.
Despite previous job cuts in 2022 due to economic worries voiced by Musk, Tesla’s employee count has risen from about 100,000 in late 2021 to over 140,000 by late 2023.
Baglino’s departure, a long-time Tesla veteran and key leader, has drawn attention, with experts discussing the strategic implications.
While some see these actions as necessary for operational efficiency, others see them as signs of challenges in growth. Tesla’s stock fell 5.6% to $161.48, showing investor worry.
Tesla’s CEO, Elon Musk (Via Josh Heard/Getty Images)
The electric vehicle (EV) market as a whole declined, with competitors like Rivian Automotive, Lucid Group, and VinFast Auto seeing their shares drop between 2.4% and 9.4%.
In the internal memo, Musk stressed the importance of examining every aspect of the company to improve cost-effectiveness and productivity, leading to the decision for layoffs.
The job cuts coincide with reports suggesting Tesla might cancel its anticipated affordable car, the Model 2.
If true, this move would impact Tesla’s strategy for expanding into the mass market, as investors had expected the Model 2 to drive growth. Musk’s cryptic comments on social media have added to uncertainty surrounding the Model 2’s status.
Reports indicate Tesla is shifting focus toward self-driving robotaxis based on a small-car platform. Musk hinted at an upcoming reveal of Tesla Robotaxis, indicating changes in the company’s priorities.
