Elon Musk Announces Over 10% Workforce Cut in Recent Tesla Staff Memo

Tesla navigates workforce reduction during economic downturn

by Zain ul Abedin
Elon Musk Announces Over 10% Workforce Cut in Recent Tesla Staff Memo
© Kevin Winter/Getty Images

In a late-night internal communication, Tesla CEO Elon Musk announced a significant reduction of the company's global workforce, impacting over 10% of its employees. The memo, distributed just before midnight in California, outlined the need for these cuts due to overlapping roles emerging as Tesla has expanded.

According to the memo, which Business Insider obtained, Musk highlighted the duplication of roles and job functions that have become apparent with Tesla’s rapid growth. This organizational review led to streamlining operations for future growth and innovations.

Tesla has experienced phenomenal expansion over recent years, necessitating a reassessment of its workforce to enhance productivity and reduce costs. Musk's announcement comes amid speculation of impending layoffs circulating within the company.

Over the weekend, rumors suggested that some managers had been asked to compile lists of employees for potential layoffs, signaling that changes were imminent. This workforce reduction is Tesla’s most substantial since its Buffalo, New York, plant layoffs in February 2023.

During that period, the Worked United union filed a complaint with the National Labor Relations Board (NLRB), accusing Tesla of terminating employees in retaliation for union activities—a claim Tesla has vehemently denied, attributing the layoffs to poor performance instead.

Layoffs Amid Market Challenges

The timing of these layoffs coincides with a challenging period for Tesla, as the demand for electric vehicles (EVs) slows and its stock value has significantly declined, dropping over 31% since the beginning of the year.

These changes unfold as Tesla prepares to release its next earnings report on April 23. Musk expressed regret over the layoffs in his memo, stating, "There is nothing I hate more, but it must be done." He assured that the decision was crucial for Tesla to maintain its drive for innovation and efficiency as it gears up for another growth cycle.

Musk also took the opportunity to thank those leaving the company, acknowledging their contributions to Tesla’s mission and wishing them well in their future endeavors. For those remaining, he noted the importance of their role in developing groundbreaking technologies in the automotive, energy, and artificial intelligence sectors.

As Tesla navigates through these adjustments, the focus remains on strengthening its position as a leader in the EV market, ensuring it remains competitive and prepared for the challenges and opportunities ahead.

Elon Musk