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Wednesday, July 17, 2024

This year, Tesla reduced its workforce by a minimum of 14%, following Elon Musk’s statement that layoffs would surpass 10%

The latest number is not based on exact payroll data, but on the count of individuals included in Tesla’s “everybody” email distribution list as of June 17th.

Tesla has undergone substantial downsizing in 2023, resulting in a reduction of its global workforce to slightly above 121,000 individuals, including temporary employees, based on internal documents. This indicates that the automaker has cut more than 14% of its total staff thus far this year.

The most recent headcount figure is derived not from precise payroll records but from the tally of individuals listed on Tesla’s “everybody” email distribution list as of June 17, as reported by CNBC.

On that day, Tesla CEO Elon Musk addressed all employees via email, announcing a forthcoming comprehensive review aimed at providing stock options grants for exceptional performance. He highlighted that such grants would also be available for anyone making outstanding contributions to the company. This move to reinstate option grants, following a pause in performance-based equity awards, was initially disclosed by Reuters.

Tesla’s decision to announce layoffs came earlier in April, when Musk informed employees via a companywide email that the automaker would be reducing its workforce by more than 10%. By that time, the layoffs were already in progress.

According to Bloomberg, Musk had initially targeted a 20% reduction in staff, suggesting that the actual number could potentially be higher. During Tesla’s first-quarter earnings call in April, Musk mentioned that the company had experienced inefficiencies ranging from 25% to 30% after a prolonged period of prosperity starting in 2019.

“We’ve made some corrections along the way,” Musk remarked during the call. “But it is time to reorganize the company for the next phase of growth.”

In its fourth-quarter filing, Tesla reported a global employee headcount of 140,473 as of the end of December, encompassing both salaried and hourly staff. The inclusion of temps in the “everybody” email list, which now stands at approximately 121,000, suggests that Tesla has reduced its overall workforce by at least 14% since the conclusion of 2023.

Tesla did not respond immediately to requests for comment. However, there have been instances where Musk’s reductions in headcount were deemed excessive. Notably, Tesla disbanded its Supercharging team, which included hundreds of employees, including its leader Rebecca Tinucci. Subsequently, the company rehired some of these personnel, as indicated by posts on LinkedIn.

These broad workforce reductions align with a downturn in Tesla’s sales, attributed to factors such as an aging lineup of electric vehicles, heightened competition in China, and declining brand perception, partly influenced by Musk’s public statements and actions, according to recent surveys. For the first quarter, Tesla reported a 9% decrease in annual revenue, marking its largest decline since 2012.

Across the automotive industry, the growth of electric vehicle sales slowed this year following two years of rapid expansion. Tesla, whose Model Y topped global car sales in 2023, experienced a particularly notable decline.

A Tesla employee, speaking anonymously due to the sensitivity of internal matters, expressed concerns that additional layoffs could occur in July depending on second-quarter results, particularly among factory workers.

Musk has assured investors of upcoming milestones, including the release of a new “Master Plan,” which would be his fourth, and the unveiling of a “dedicated robotaxi” design on August 8th. Tesla is expected to publish its second-quarter production and delivery report during the first week of July.

On Friday, Tesla shares showed minimal movement, closing at $181.71. Year-to-date, the stock has declined by 27%, contrasting with an 18% increase in the Nasdaq index.

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