Tesla management said employees on Monday that the recent layoffs, which gutted some departments by 20% and even hit high-performing ones, 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 reports its first-quarter earnings. The move comes as Tesla has seen its profit margin shrink in recent quarters, the result of an electric vehicle price war that has persisted 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 a bid to boost sales and undercut competition.
Tesla informed employees that more than 10%, or about 14,000 workers, will be laid off across the global organization that has operations in the United States, Europe and China. The layoffs, which affected employees across all departments and seniority levels, were done to reduce costs and increase productivity to prepare for its “next phase of growth,” according to an internal email from CEO Elon Musk seen by TechCrunch.
High performers also cut
Many of the laid-off employees were high performers, according to two sources who spoke to TechCrunch on condition of anonymity. One source expressed surprise at the number of talented employees cut, noting that many of those affected were working on projects that have fallen lower on Tesla's priority list. The source declined to specify which projects.
According to sources, some departments experienced layoffs greater than the 10% described in the company-wide email. One manager told TechCrunch that 20% of his employees were laid off.
“I lost 20% of my team, and some really good players too,” they said.
The restructuring also comes as Musk continues to tilt the company's trajectory toward building fully autonomous cars. Tesla recently abandoned plans to build a lower-cost electric vehicle that would sell for around $25,000, opting instead to use the underlying platform being developed to power a purported robotaxi that Musk says will debut on December 8. August.
Musk previously attempted to prioritize the dedicated robotaxi vehicle project, according to his biographer, Walter Isaacson. In 2022, he told employees that he wanted a “clean robotaxi” without a steering wheel or pedals. Tesla's chief designer, Franz von Holzhausen, and vice president of engineering, Lars Moravy, continued to run the low-cost electric vehicle project in secret and eventually convinced him to build both—that is, until last week, when it was announced. reported that Musk changed his mind.
Top executives 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, also left the company.
Patel told TechCrunch that he decided Sunday night to leave Tesla due to “big overall changes” at the company. Patel, who had been regularly interacting with customers and Tesla fans at 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 good,” he added.
Baglino told TechCrunch that after 18 years it was time to leave Tesla. “I feel good about the impact I've been able to make, my leadership team is strong, the energy companies I'm responsible for are doing well, etc.,” he wrote in a message to TechCrunch.
“Baglino was in charge of propellants and new battery projects, and there is a feeling that there is not much innovation that is sustainable at the moment, which is probably why Baglino is leaving,” said Sandeep Rao, head of London research. The financial services company based Leverage Shares theorized in an interview with TechCrunch.
Baglino's departure comes just months after Tesla's previous CFO, Zachary Kirkhorn, resigned. In January, twitter.com/elonmusk/status/1746999488252703098?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1747035106257023362%7Ctwgr%5E9436818db9e229e69d62a6e7f333823ee0f55ffc%7Ctwcon%5Es2_&ref_url=https%3A%2F%2Fwww.reuters.com%2Ftechnology%2Fmusk-seeks-25-voting-share-tesla-2024-01-16%2F” target=”_blank” rel=”noopener”>Musk posted on xpreviously twitter, which would like to have around 25% of Tesla's voting control so it can focus more fully on the company, rather than its other ventures, and help the electric vehicle maker become a leader in artificial intelligence and robotics .
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