Tesla will lay off more than 10% of its workforce, totaling at least 14,000 people worldwide, the company’s CEO Elon Musk told workers on Monday.
The electric carmaker’s notoriously volatile stock has declined more than 30% since Jan. 1.
“There is nothing I hate more, but it must be done,” Musk wrote in a memo to employees obtained by CNBC. “This will enable us to be lean, innovative and hungry for the next growth phase cycle.”
Musk, 52, said that more than 10% of Tesla jobs worldwide would be affected. As of December 2023, Tesla had 140,473 employees, according to its annual report.
Tesla remains a dominant force in the electric vehicle industry, but it has faced increasing competition in recent years, particularly in China. In the fourth quarter of 2023, Chinese EV maker BYD temporarily became the industry leader, and Chinese smartphone company Xiaomi began selling EVs earlier this year.
“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,” Musk wrote in Monday’s layoff memo.
Tesla shares were down 3% on Monday morning following news of the layoffs. The announcement came 10 days after Reuters reported that Tesla had canceled long-standing plans to develop a cheaper car, to be named the Model 2. Musk claimed on Twitter that “Reuters is lying” but hasn’t commented on the car since.
Additionally, Tesla settled a lawsuit last week with the estate of a Northern California man who was killed in a car crash while using Tesla’s “Autopilot” self-driving technology. The size of the settlement was not disclosed.
While Tesla shares of plummeted in 2023, shares of gas-focused companies such as Toyota and General Motors have climbed 45% and 20%, respectively.
