Tesla is planning massive layoffs

Rumours quickly turned into certainty over the course of the day: Tesla is preparing a major wave of redundancies. This was revealed in an internal email from CEO Elon Musk to employees. According to the email, the global workforce is to be reduced by at least ten per cent.

Image: Tesla

As the US website Electrek reports, an internal email from CEO Elon Musk states that Tesla has decided to reduce the number of jobs worldwide by “more than ten per cent.” The reason is the “rapid growth” in the past, which has led to “duplication of roles and job functions in certain areas.”

The portal initially reported that up to 20 per cent of employees could be cut, quoting employees who had heard corresponding rumours. And while “more than ten per cent” does not necessarily mean 20 per cent, it still means that at least 14,000 Tesla employees will lose their jobs.

Electrek also mentions another possible reason. According to the US portal, Tesla will scale back production of the Cybertruck at its factory in Texas. The latest annual report states that more than 125,000 units of the electric pickup could be built there each year. It is unknown how many actually roll off the production line there or will do so after a possible cutback. However, it would not be the first production cut in recent weeks. At the end of March, Tesla announced that it would scale back production at its plant in China. Bloomberg reported, citing insiders, that Tesla had manufactured its Model 3 and Model Y at the Shanghai plant on five days a week since the beginning of March – instead of the previous 6.5 days.

The fact that the first quarter went anything but smoothly was made clear by the declining production and delivery figures published at the beginning of April. “Decline in volumes was partially due to the early phase of the production ramp of the updated Model 3 at our Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin,” Tesla wrote as an explanation.

About the possible layoffs, Electrek also specified that Tesla has often carried out annual waves of layoffs in the past, which were due to “hiring inefficiencies amid rapid headcount growth.” According to Musk’s email that is how the company will justify the layoffs. However, Electrek also writes that the workforce has grown less recently than it used to – and that the very poor quarter and the production cutbacks are probably the main reasons for the staff cuts.

While unconfirmed, Electrek speculates that Drew Baglino and Rohan Patel could be among those looking for new employment in the near future. Baglion is Tesla’s current Senior VP of Powertrain and Energy, while Patel is the carmaker’s Policy chair. Again, Tesla has not confirmed that the two will leave the company, but their “Tesla-affiliated” badge on twitter has been removed. So it does at least seem possible.

Tesla currently employs around 140,000 people worldwide. This means that at least 14,000 employees will be affected by the job cuts. While it was initially unclear how this step would affect the individual factories, such as the German factory in Grünheide, the Handelsblatt has reported, citing two internal sources, that the company would be laying off around 3,000 of the 12,500 employees there. In other words, almost every fourth employee, significantly higher than the first rumours stated. The first affected employees have already been informed of this, according to the report.

electrek.co,  electrek.co (Musk email), handelsblatt.com (in German)


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