Tesla laying off more than 10% of staff globally as sales fall

After reporting dismal first-quarter sales, Tesla is planning to lay off about a tenth of its workforce as it tries to cut costs, multiple media outlets reported on Monday.

CEO Elon Musk detailed the plans in a memo sent to employees. The layoffs could affect about 14,000 of the 140,473 workers employed by the Austin, Texas-based company at the end of last 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 said in the memo sent to all staff.

"As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10 percent globally," it said.

"About every five years, we need to reorganize and streamline the company for the next phase of growth," CEO Elon Musk commented in a post on X. Two senior leaders, battery development chief Drew Baglino and vice president for public policy Rohan Patel, also announced their departures, drawing posts of thanks from Musk although some investors were concerned.

Baglino, who held several top engineering jobs at the company and was chief technology officer, wrote that the decision to leave was difficult. "I loved tackling nearly every problem we solved as a team and feel gratified to have contributed to the mission of accelerating the transition to sustainable energy," he wrote.

He has no concrete plans beyond spending more time with family and his young children, but wrote that he has difficulty staying still for long.

Musk thanked Baglino in a reply. "Few have contributed as much as you," he wrote.

Scott Acheychek, CEO of Rex Shares, described the headcount reductions as strategic, but Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, deemed the departures of the senior executives as "the larger negative signal today" that Tesla's growth was in trouble.

Less than a year ago, Tesla's chief financial officer, Zach Kirkhorn, left the company, fueling concerns about succession planning.

Tesla shares closed 5.6 percent lower at $161.48 on Monday. Shares of Tesla Inc. have lost about one-third of their value so far this year as sales of electric vehicles soften.

Musk last announced a round of job cuts in 2022, after telling executives he had a "super bad feeling" about the economy. Still, Tesla's headcount has risen from around 100,000 in late 2021 to over 140,000 in late 2023, according to filings with U.S. regulators.

Reuters saw an email sent to at least three U.S. employees notifying them their dismissal was effective immediately.

(With input from AP, Reuters)