Tesla management said On Monday, employees said the recent layoffs — which gutted some departments by 20% and even affected top-performing employees — were largely due to poor financial performance, a source familiar with the matter told TechCrunch.
The layoffs were announced to staff just a week before Tesla reported its first quarter results. The move comes as Tesla has seen its profit margin shrink in recent quarters, the result of an electric vehicle price war that has lasted for at least a year. The company delivered a record 1.81 million vehicles in 2023. However, its margins took a hit after Tesla repeatedly cut prices in an effort to increase sales and reduce competition.
Tesla has informed its employees that more than 10%, or approximately 14,000 workers, will be laid off across the global organization with operations in the United States, Europe and China. The layoffs, which affected employees across all departments and seniority levels, were made to reduce costs and increase productivity to prepare for its “next phase of growth,” according to an internal email from CEO Elon Musk that TechCrunch consulted.
The best performers also reduce
Many of the laid-off employees were high performers, according to two sources who spoke to TechCrunch on condition of anonymity. One source said it was shocked by the number of talented employees being cut and noted that many of those affected were working on projects that were not on Tesla’s priority list. The source declined to specify which projects.
Some departments have seen layoffs higher than the 10% indicated in the company-wide email, sources said. One manager told TechCrunch that 20% of its employees had been laid off.
“I lost 20% of my team, some very good players too,” they said.
The shakeup also comes as Musk continues to steer the company’s trajectory toward building fully autonomous cars. Tesla recently abandoned plans to build a less expensive electric vehicle that would cost around $25,000, preferring to use the underlying platform under development to power a purported robo-taxi that Musk says will debut on the 8th. august.
Musk had already tried to prioritize the dedicated robotaxi vehicle project, according to his biographer, Watler Isaacson. In 2022, he told employees he wanted a “clean robotaxi,” without a steering wheel or pedals. Tesla’s lead designer, Franz von Holzhausen, and vice president of engineering, Lars Moravy, continued to lead the low-cost electric vehicle project in secret and eventually convinced him to do both – until to last week, when it was reported that Musk had changed his mind.
Senior leaders leave
Two high-profile executives – Drew Baglino, Tesla’s senior vice president of powertrain and energy, and Rohan Patel, vice president of public policy and business development – have also left the company.
Patel told TechCrunch that he decided Sunday evening to leave Tesla due to “(b)ig overall changes” within the company. Patel, who has regularly spoken to Tesla customers and fans on X in recent months, declined to be specific. He noted in a message that it would be “better for me not to speculate.” “Tesla is going to be stronger than ever, and change is a good thing,” he added.
Baglino told TechCrunch that after 18 years, it was time to leave Tesla. “I am happy with the impact I have been able to achieve, my management team is strong, the energy companies I am responsible for are doing well, etc.,” he wrote in a message to TechCrunch.
“Baglino was in charge of transmission projects and new batteries, and there is a feeling that there is not a lot of sustainable innovation at this stage, which probably explains Baglino’s departure,” Sandeep Rao, manager research in London. Leverage Shares-based financial services company, theorized in an interview with TechCrunch.
Baglino’s departure comes just months after the resignation of former Tesla CFO Zachary Kirkhorn. In January, Musk posted on Xformerly Twitter, that he would like to have about 25% of Tesla’s voting control in order to focus more on the company rather than his other companies, and help the electric vehicle maker become a leader in AI and technology. robotics.
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