Tesla CEO “Elon Musk” has announced major layoffs at Tesla . According to a memo published by Electrik , Tesla is going to have a massive job cuts which will account for about 10% of the Tesla Global workforce .
Previously reports were coming that the layoffs at Tesla might take the headcount to less than 80% of present head count , but Tesla CEO “Elon Musk” himself denied all that claims by sending an email to all the employees of Tesla announcing 10 % job cuts at Tesla.
To have an estimate of job cuts that is gojng to happen , let us see how the employee count has changed at Tesla since past few years.
Tesla Employee Headcount (2020-2023)
| Year | Tesla Employee Headcount | Source |
|---|---|---|
| 2023 | 140,473 | MacroTrends: |
| 2022 | 127,855 | MacroTrends: |
| 2021 | 99,290 | MacroTrends: |
| 2020 | 70,757 | MacroTrends: |
So , by the numbers of headcount at Tesla in 2023 , we can expect its 10% as somewhat 14000 employees, so yes here is the number we can expect to get layoffs at Tesla this time. So if we try to understand the employee count at Tesla after job cuts it would look like something this.
According to the email sent by Elon to his employees , he did not want to do layoffs but he had to take this decision as he wants the company to be hungry for success and at the same time not too large. He continued that due to major growth at Tesla in recent times , some roles got duplicated thus there were multiple people doing the same job. Further he congratulated employees who are gonna unaffected with the major layoffs at Tesla while asked the employees who are going to face job cuts to continue to work hard and thanked them for their contribution at Tesla.
Major Reasons for Layoffs at Tesla
Tesla for long has been following the startup culture , which I guess also has been the reason behind their grand success, but this very culture has also made a bad impression of Tesla among its employees, as anytime you can receive your mail of layoff at Tesla.
So ,let us see what can be major reasons of layoffs at Tesla This Time:
Reasons for Layoffs at Tesla
Missed Delivery Targets and Declining Sales Growth:
- Tesla recently reported a disappointing quarter, significantly missing delivery estimates and experiencing a rare year-over-year sales decline.
- This suggests a potential slowdown in demand, particularly in China where domestic EV competition is intensifying.
Shifting Priorities and Upcoming Product Lineup:
- Tesla is likely preparing for its “next phase of growth” with the release of new vehicles like the Model 2.
- Elon Musk’s recent focus on a robotaxi project might also influence resource allocation, potentially delaying the Model 2.
- This shift requires adjusting workforce needs towards the new strategic direction.
Cost-Cutting Measures in a Changing Tech Landscape:
- The layoffs align with a trend of cost-cutting measures across the tech industry, even where profits remain high.
- Tesla might be looking to optimize its workforce in anticipation of a potentially changing market landscape.
Additional Considerations:
- Analyst estimates still predict a Q1 2024 profit for Tesla, although lower than the previous year. This suggests the layoffs might be aimed at streamlining operations rather than reflecting financial distress.
- The impact of high interest rates and potential economic slowdown on consumer spending could also be a factor in Tesla’s cautious approach.
Conclusion
The layoffs at Tesla appear to be a multi-faceted issue. Declining sales growth, particularly in China, combined with a shift in focus towards new products like the robotaxi, necessitates a workforce adjustment. Additionally, cost-cutting measures prevalent in the tech industry might influence Tesla’s decision. While the company remains profitable, it’s likely taking a proactive approach to optimize its resources for future growth. However, further analysis of Tesla’s upcoming earnings report and details about the robotaxi project are needed to fully understand the company’s long-term strategy.
