Tesla to lay off more than 10% of its staff, Electrek reports

Tesla will lay off more than 10% of its workforce, tech publication Electrek reported on Monday, citing an internal memo, as the top auto-maker struggles with soft demand for its electric vehicles in a highly competitive market. Over the last few months, Tesla asked managers to identify critical team members, paused some stock rewards and canceled some employees' annual reviews, according to the report.

Tesla will lay off more than 10% of its workforce, tech publication Electrek reported on Monday, citing an internal memo, as the top auto-maker struggles with soft demand for its electric vehicles in a highly competitive market.

Over the last few months, Tesla asked managers to identify critical team members, paused some stock rewards and canceled some employees' annual reviews, according to the report. The world's largest automaker by market value had 140,473 employees globally as of December 2023, according to its latest annual report. The reported cuts will affect about 15,000 workers.

Tesla had previously laid off 4% of its workforce in New York in February last year as part of a performance review cycle and before a union campaign was to be launched by its employees. "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," Electrek reported, citing CEO Elon Musk's statement in the internal memo.

Tesla did not immediately respond to a request for comment. Tesla, which is set to report its quarterly earnings on April 23, reported a decline in vehicle deliveries in the first quarter, its first in nearly four years and also below market expectations.

Meanwhile, the company has scrapped plans to produce an inexpensive car, abandoning one of Musk's longstanding goals to make affordable EVs for the masses. Tesla shares were down 0.3% in premarket trading on Monday.

After years of rapid sales growth that helped turn Tesla into the world's most valuable automaker, the company is bracing for a slowdown in 2024. The EV maker has been slow to refresh its aging models as high interest rates have sapped consumer appetite for big-ticket items, while rivals in China, the world's largest auto market, are rolling out cheaper models.

The company is looking to shore up its margins, which have been dented by repeated price cuts. It recorded a gross profit margin of 17.6% in the fourth quarter, the lowest in more than four years.