Tesla, under CEO Elon Musk’s leadership, is implementing a workforce reduction exceeding 10% globally, as revealed in an internal memo.
Musk stated the need for periodic organizational restructuring every five years to align with future growth phases.
Departures of senior figures, including battery development chief Drew Baglino and public policy vice president Rohan Patel, were also announced, sparking investor apprehension.
Despite previous job cuts in 2022 amid economic concerns voiced by Musk, Tesla’s employee count has surged from approximately 100,000 in late 2021 to over 140,000 by late 2023.
The departure of Baglino, a longtime Tesla veteran and key leadership member, raised eyebrows, with industry experts weighing in on the strategic implications.
While some view these moves as essential for operational efficiency, others perceive them as signs of underlying growth challenges. Tesla’s stock plummeted by 5.6% to $161.48, reflecting investor unease.
The EV market saw a broader decline, with shares of competitors like Rivian Automotive, Lucid Group, and VinFast Auto dropping between 2.4% and 9.4%.
Musk, in the internal memo, emphasized the imperative of scrutinizing every facet of the company to enhance cost-effectiveness and productivity, prompting the decision for the layoffs.
The layoffs coincide with recent reports suggesting the cancellation of Tesla’s much-anticipated budget-friendly car, the Model 2.
This decision, if true, would affect Tesla’s mass-market growth strategy, as investors had anticipated its release to propel expansion. Amid speculation surrounding the Model 2, Musk’s cryptic response on social media has fueled further uncertainty.
Tesla’s focus appears to be shifting towards self-driving robotaxis based on a small-car platform, according to reports. Musk teased an upcoming Tesla Robotaxi reveal, hinting at the company’s evolving priorities.
