Yesterday night, Musk released an internal Tesla email, suddenly announcing that he would lay off more than 10% of the world's workforce.
As of December 31, 2023, Tesla had 140,473 employees worldwide, according to previous filings with the SEC — and a layoff of more than 10% means that at least 14,000 employees will be laid off.
Musk said in the email that this is the thing he "hates the most", but that Tesla "has to do it" in order to "excel, innovate and be ready for the next growth cycle."
Notices of layoffs that can be followed
This email may seem like a sudden, but if we move back in time, we will find that everything is traceable.
Back in December 2023, several Tesla employees reported that in the past, during the annual performance review, they would not only receive salary adjustments, but also receive performance-based stock awards on top of their existing equity. But last year Tesla scrapped that incentive, even for the best performers.
By February, Bloomberg reported that Tesla had asked all managers to identify "key" members of their teams and had delayed performance reviews for some employees. At the time, the industry speculated that this was in preparation for layoffs.
In March, a person familiar with the matter revealed that Tesla asked the Shanghai Gigafactory to adjust the production line operation time of Tesla's Model 3 and Model Y from six and a half days a week to five days a week, due to "slowing demand for electric vehicles and fierce market competition". And last week, Tesla once again notified employees at its Gigafactory in Texas, USA, that it had decided to adjust the production shifts of the Cybertruck and reduce the working hours.
Amid all these rumors, many media outlets believe that Tesla is planning large-scale layoffs, and some even revealed that this round of layoffs will involve up to 20% of its employees.
Now, these rumors have been confirmed in this all-staff email from Musk. The only difference is that the layoffs announced this time are not 20% but "more than 10%":
Over the years, we have grown rapidly and have several factories around the world. As the company has grown rapidly, there has been overlap in roles and job functions in certain areas. As we prepare for the next phase of our company's growth, it is extremely important to look at all aspects of the company to reduce costs and increase productivity.
As part of this effort, we conducted a thorough review of the company and made the difficult decision to lay off more than 10% of our workforce globally. There's nothing more annoying to me than that, but it has to be done. This will enable us to excel and innovate and prepare for the next growth cycle.
I would like to thank everyone who is leaving Tesla for their hard work over the years. I am deeply grateful for your many contributions to our mission and wish you all the best in your future endeavors. Saying goodbye is a very difficult thing to do.
For those who stayed, I would like to thank you in advance, because the work ahead is still difficult. We're developing the most revolutionary technologies in automotive, energy, and AI. Your determination will play a huge role in achieving our goals as we prepare for the next phase of our company's growth.
Shortly after the email came to light, many Tesla employees claimed to have locked access to the system, and some security guards learned that they had been laid off after scanning badges and being denied access to the factory. In addition, someone on Reddit made public the notice of dismissal he received:
Dear staff,
Today, we're sharing with you a big decision that affects the entire organization and you.
Over the years, we have grown rapidly and have several factories around the world. As the company has grown rapidly, there has been overlap in roles and job functions in certain areas. As we prepare for the next phase of our company's growth, it is extremely important to look at all aspects of the company to reduce costs and increase productivity.
As part of this effort, we conducted a comprehensive review of the organization and made the difficult decision to reduce the number of employees worldwide. Unfortunately, your position was cut as a result.
Two high-profile executives have left Tesla
This is not the first time that Tesla has laid off 10% of its workforce in June 2022, when Musk cited "too many employees in many areas" and that the layoffs did not involve employees on the production line.
A few hours after the layoff notice was revealed, it sparked heated discussions on various social platforms. Judging from the content of the email, it is impossible to determine the specific percentage of layoffs of "more than 10%", and it is not clear which teams will be more affected. However, according to domestic auto bloggers @孙少军 09 and @胖虎 Shawn, Tesla has begun to communicate with stores about the list of layoffs, and the compensation standard is N+3, "basically every store has people laid off".
In addition, it is known that two high-profile executives have announced their departure from Tesla, but it is not known whether they were laid off or voluntarily left - Drew Baglino, senior vice president of Tesla's powertrain and energy business, and Rohan Patel, vice president of public policy and business development.
Drew Baglino has been with Tesla for 18 years and is the company's highest-level head of engineering, responsible for Tesla's various core businesses, including batteries, motors, drives, power electronics, and energy products. He posted on X yesterday: "Yesterday, I made a difficult decision to leave Tesla, where I worked for 18 years. I am so grateful to have worked with and learned from the countless talented employees at Tesla over the years. ”
Talking about future plans, Drew Baglino bluntly said that he has no specific plans for the time being, and just wants to spend more time with his family and children, but he also added: "Those who know me well know that it is difficult for me to sit still for a long time, ......" Soon after, Musk specially left a message to Drew Baglino to express his gratitude, saying, "Few people can make such a big contribution like you." ”
Another departing executive, Rohan Patel, who joined Tesla in 2016, also posted on X about leaving Tesla: "8 years at Tesla have been filled with all kinds of emotions, and I feel very grateful today...... It's an honor to work at Tesla and make a positive difference in multiple industries. ”
The market capitalization plummeted by $30.4 billion, the lowest for the year
In recent years, it has been common for major technology companies to carry out large-scale layoffs on the grounds of "reducing costs and increasing efficiency", and many companies will have their stock prices rise after layoffs, such as Microsoft's market value exceeded the 3 trillion mark on the day after announcing the layoff of 1,900 people in the gaming department - but this time Tesla is not.
For the reasons for Tesla's layoffs, some industry insiders have analyzed that it may be related to the decline in sales and performance: data shows that Tesla delivered 386,800 vehicles in the first quarter of this year (on the basis of continuous price reductions), a year-on-year decline of 8.3% and a month-on-month decrease of more than 20%, far lower than Wall Street expectations. In contrast, Chinese EV manufacturers are rapidly expanding into domestic and export markets.
Not only that, but the successive departures of key executives also make people wonder whether Tesla's growth is in trouble.
As a result, affected by the news of Tesla's layoffs, its U.S. stock fell 5.59% on April 16, local time, and its market value evaporated by 30.4 billion US dollars (about 220 billion yuan), setting a new low for Tesla's stock price this year.
So, what do you think about Tesla's large-scale layoffs?
Reference link: https://electrek.co/2024/04/15/tesla-lays-off-more-than-10-of-its-global-workforce/