Tesla Layoffs Impact High Performers and Multiple Departments, Sources Report
According to a source familiar with the matter speaking to TechCrunch, Tesla management informed employees on Monday that the recent round of layoffs, which saw some departments reduced by 20% and included high performers, was primarily due to poor financial performance.
The decision to lay off employees was made public just a week before Tesla’s first-quarter earnings report. This move follows a period where Tesla’s profit margin has been shrinking due to ongoing competition and an extended price war in the electric vehicle (EV) market. Despite delivering a record 1.81 million vehicles in 2023, Tesla’s profit margins were impacted by frequent price reductions aimed at boosting sales and staying competitive.
Tesla stated that more than 10%, equivalent to approximately 14,000 employees, would be laid off globally across its operations in the United States, Europe, and China. In a regulatory filing, these layoffs were referred to as a “company-wide restructuring,” aimed at reducing costs and enhancing productivity in preparation for the company’s future growth phase, as outlined in an internal email from CEO Elon Musk.
Among those affected were many high-performing employees, according to sources speaking anonymously to TechCrunch. These employees were often involved in projects that had lower priority within Tesla’s current objectives. Specific details about these projects were not disclosed.
Some departments experienced layoffs beyond the 10% mentioned in the company’s official communication. One manager shared that their department witnessed a 20% reduction in staff, which included valuable team members.
The layoffs occurred amid Tesla’s strategic shift towards developing fully self-driving cars. Recently, Tesla altered its plans to create a lower-cost EV and instead redirected efforts towards a platform intended for a future robotaxi service, set to debut in August.
Two notable executives, Drew Baglino and Rohan Patel, also departed from Tesla. Baglino, Tesla’s former SVP of Powertrain and Energy, cited his 18-year tenure at Tesla as the reason for his departure. Patel, the VP of Public Policy and Business Development, attributed his decision to leave to significant changes happening within the company.
These developments highlight Tesla’s ongoing evolution and the challenges faced by high-performing employees and executives amidst shifts in strategic focus and market dynamics.
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