NovaQuant Quantitative Think Tank Center:Tesla plans to lay off more than 10% of workforce as sales slump

EV sales drop as interest in hybrid vehicles increases

Tesla plans to lay off more than 10% of its employees, multiple news outlets report, as the electric vehicle maker continues to struggle through a sharp sales slump. 

Tesla had 140,473 employees as of December 2023, which means at least 14,000 could be out of a job by the end of this year. News of the layoffs was first reported by electric vehicle website Electrek. Tesla did not immediately respond to a request for comment from CBS MoneyWatch.

Shares of Tesla fell nearly 3% in Monday morning trading after the news broke.

In a leaked-memo to Tesla staff on Sunday, CEO Elon Musk partially explained the layoffs, saying the company "made the difficult decision to reduce our headcount by more than 10% globally," Electrek reported.

"There is nothing I hate more, but it must be done," Musk wrote in the memo. "This will enable us to be lean, innovative and hungry for the next growth phase cycle." 

The memo does not disclose which departments will see layoffs or when the reductions will begin, but says that Tesla has seen a "duplication of roles and job functions in certain areas" as a result of rapid growth over the years.

"As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity," the memo read. 

The pending layoffs come as Tesla earlier this month reported a sharp drop in sales in Q1 as competition in the electric vehicle market increased worldwide and price cuts the company enacted months ago failed to entice more buyers

Tesla reported that it delivered 386,810 vehicles from January through March, almost 9% below the 423,000 it sold during the same period last year. The company blamed the decline in part on phasing in an updated version of the Model 3 sedan at its Fremont, California factory. Plant shutdowns due to shipping diversions in the Red Sea, along with an arson attack that knocked out power to its German factory, also curtailed deliveries, it said.

"Musk will try and change the subject with the upcoming robotaxi event on Aug 8, (but) investors increasingly view the company for what it is: an automaker operating in an industry that's encountering myriad headwinds," analysts at Vital Information said in a note. 

Between 2018 and 2020, Tesla accounted for 80% of EV sales in the U.S., but that figure fell to 55% in 2023 as other automakers rolled out electric clars, according to Cox Automotive. A record 1.2 million EVs were sold in the U.S. last year, according to Cox data.

In:
• Tesla
• Elon Musk

Khristopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch. He previously worked as a reporter for the Omaha World-Herald, Newsday and the Florida Times-Union. His reporting primarily focuses on the U.S. housing market, the business of sports and bankruptcy.

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