Elon Musk Seeks 20% Tesla Cuts After Delivery Slump, Source Says

Tesla faces tough competition, sparking strategic workforce adjustments

by Zain ul Abedin
Elon Musk Seeks 20% Tesla Cuts After Delivery Slump, Source Says
© Omar Marques/Getty Images

Bloomberg sources reveal that Tesla CEO Elon Musk has announced plans to reduce the company's workforce by 20%, aligning with a similar drop in quarterly vehicle deliveries. This strategic decision comes as the electric vehicle giant grapples with mounting challenges, including aggressive competition from Chinese automakers and a significant downturn in sales.

In a recent internal memo, Musk informed Tesla employees of the impending layoffs, stressing the need to eliminate redundancy and streamline operations. "Over the years, we have grown rapidly, expanding our global footprint with multiple new factories.

This expansion, however, has led to an overlap of roles and functions," Musk wrote. The decision to cut the workforce is seen as a move to keep the company efficient, innovative, and prepared for future growth. The first quarter of 2024 saw Tesla deliver 386,810 vehicles, marking a 20.1% decrease from the previous quarter and representing the lowest quarterly output since 2022.

This slump in deliveries prompted Musk's call for a proportional reduction in staff. The layoffs are part of a broader strategy to recalibrate the company's operations amidst a dynamic and increasingly competitive automotive landscape.

Musk's Competing Challenges

Tesla's struggle is not just internal but is exacerbated by the rise of formidable competitors, particularly from China. Earlier this year, Musk highlighted the threat from Chinese companies like BYD, acknowledging them as some of the most formidable players in the global automotive market.

"Chinese automakers are the most competitive car companies in the world," Musk conceded during a January earnings call. As Tesla navigates these turbulent waters, questions arise about Musk's capacity to manage multiple ventures effectively.

His portfolio includes not only Tesla but also SpaceX, The Boring Company, Neuralink, X, and xAI, raising concerns about his ability to maintain focus and drive growth across his enterprises. Despite the challenges, Musk remains resolute that the workforce reduction is a painful but necessary step.

"There is nothing I hate more, but it must be done," he stated in the memo. As Tesla aims to adapt and sustain its pioneering role in the EV market, the coming months will be crucial in determining how well the company can balance efficiency with innovation in an increasingly competitive industry.

Tesla representatives have yet to respond to inquiries regarding the layoffs, leaving industry watchers and investors awaiting further details on the company's strategic adjustments and their implications for Tesla's future.

Elon Musk