Tesla reportedly to cut more than 10% of staff in face of profit concerns

By Emily Bary

Company looking to get leaner as EV demand has cooled down

Faced with a cooling of demand and investor concerns about profits, Tesla Inc. reportedly is conducting substantial job cuts.

The company sent a memo to staff announcing layoffs that would affect more than 10% of its workforce globally, industry publication Electrek reported early on Monday. The note, signed by Chief Executive Elon Musk, mentioned a need to get leaner and cut back on duplicative roles.

"This will enable us to be lean, innovative and hungry for the next growth phase cycle," the note said, according to Electrek's report. Tesla (TSLA) cited a global headcount of 140,473 as of the end of 2023 in its last 10-K filing.

The company didn't immediately return a request for comment.

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Tesla's reported layoffs come in the wake of a disappointing first-quarter delivery report earlier this month. The electric-vehicle maker delivered 386,783 units in the period, while analysts tracked by FactSet had expected 457,000 deliveries. The performance also marked a steep decline relative to the 423,000 EVs that Tesla delivered in the first quarter of 2023.

The company is dealing with heightened competition, and the EV industry in general must contend with a cooling of demand. Tesla has cut prices at various points in the past year to spur demand, though the move has weighed on the company's margins.

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Tesla shares have been among the S&P 500's SPX weakest performers on a year-to-date basis, falling 31% in 2024 thus far. The stock is down 0.7% in premarket trading, with the reported job cuts potentially outweighing news of a price reduction on the company's Full Self Driving technology, which had driven a small after-hours stock bump on Friday.

The company has big choices ahead of it this year as it plans a summer unveiling of its robotaxi offering, even as some are unconvinced that Tesla will be able to roll out a plan showing commercial viability given that true autonomous-driving technology still isn't ready for primetime. Additionally, the company must decide what to do about its low-cost Model 2 vehicle, following a report that the company is scrapping plans for that car, though Musk has denied that's the case.

Opinion: Why Elon Musk's latest Tesla robotaxi promise is unlikely to deliver

-Emily Bary

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04-15-24 0708ET

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