‘There is nothing I hate more, but it must be done’: Elon Musk to cut 14,000 jobs from Tesla

The billionaire said decision had been made to ensure company was ‘lean, innovative and hungry for the next growth phase cycle’

Electric vehicle powerhouse Tesla is reportedly planning to cut more than 10 per cent of its global workforce – some 14,000 jobs – with CEO Elon Musk telling staff that the lay-offs “must be done”.

The billionaire entrepreneur wrote in an internal memo that there was “nothing I hate more” than cutting down the workforce, but the decision had been made to ensure the company was “lean, innovative and hungry for the next growth phase cycle”.

It comes after Tesla reported dismal first-quarter sales. Sales fell sharply last quarter as a result of increased competition worldwide. The company said it delivered 386,810 electric vehicles from January through March, nearly 9 per cent below the 423,000 it sold in the same quarter of last year.

According to its annual report, as of 31 December 2023, Tesla employed 140,473 people worldwide.

In the memo, shared by online publication Electrek on Monday, who was first to report on the cuts, Mr Musk wrote: “Over the years, we have grown rapidly with multiple factories scaling around the globe.

The billionaire tech entrepeneur said the decision had been made to ensure the company was ‘lean, innovative and hungry for the next growth phase cycle’ (Copyright 2024 The Associated Press. All rights reserved.)

“With this rapid growth there has been duplication of roles and job functions in certain areas. 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.

“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 per cent globally.

“There is nothing I hate more, but it must be done. This will enable us to be lean, innovative and hungry for the next growth phase cycle.”

The memo continued: “I would like to thank everyone who is departing Tesla for their hard work over the years. I’m deeply grateful for your many contributions to our mission and we wish you well in your future opportunities. It is very difficult to say goodbye.”

Mr Musk also thanked those remaining at the company in advance for the “difficult” tasks ahead. “Your resolve will make a huge difference in getting us there,” he wrote.

Also on Monday, two key Tesla executives announced on the social media platform X – also owned by Mr Musk – that they are due to leave the company. Andrew Baglino, senior vice president of powertrain and energy engineering, wrote that he had made the decision to leave after 18 years with the company.

“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, a mission that I am quite passionate about,” Mr Baglino wrote.

“I will always have a warm spot for the people of Tesla and Tesla products in my heart and wish the team and company the best in the future.”

Mr Baglino added that he had no concrete plans beyond spending more time with family and his young children, but said that he has “difficulty staying still for long”.

In response to the post, Mr Musk told him: “Few have contributed as much as you.”

Rohan Patel, senior global director of public policy and business development, also wrote on X that he was leaving Tesla after eight years.

Following Monday’s news of the lay-offs and senior departures, shares of Tesla fell more than 3 per cent. Shares of Tesla Inc. have lost about one-third of their value so far this year as sales of electric vehicles soften.

Since last year, the company has cut prices by as much as $20,000 on some models as it faced increasing competition and slowing demand. The price cuts caused used electric vehicle values to drop and clipped Tesla’s profit margins.

The company has said it will reveal an autonomous robotaxi at an event in August.

Mr Musk currently sits in third position on Forbes’ Real Time Billionaire’s list, with an estimated wealth of $188.6bn. Amazon boss Jeff Bezos sits in second, and French businessman Bernard Arnault and his family are number one, with a fortune of $213bn.