Tesla will cut more than 10% of its workforce globally, according to multiple reports, sending Tesla’s struggling stock down yet again Monday and serving as a grim milestone for the electric vehicle giant’s recent growing pains.
Tesla’s centibillionaire CEO Elon Musk announced the layoffs that will impact more than 10,000 employees in a staff memo, industry publication Electrek first reported (Tesla didn’t respond to Forbes’ request for comment).
“There is nothing I hate more, but it must be done,” Musk explained, emphasizing twice in the short note the job cuts will enable Tesla to get into gear for its “next phase of growth.”
That’s the same refrain Musk used following Tesla’s highly disappointing January earnings report, and demonstrates the significant challenges facing the automaker as it is fresh off of a 23% year-over-year decline in profits and its first negative quarterly vehicle delivery annual growth in four years.
Shares of Tesla slipped about 1% in early trading, moving against broader market gains extending its more than 30% year-to-date decline.
“This is an ominous signal that speaks to tough times ahead for Tesla as Musk navigated this Category 5 storm,” Wedbush analyst Dan Ives wrote in emailed comments to Forbes. “Demand has been soft globally and this is an unfortunately necessary move for Tesla to cut costs with a softer growth outlook.”
Bloomberg reported in February that Tesla managers were required to identify whether employees’ roles were vital. Tesla previously conducted mass layoffs of 9% and 4% of its total workforce in 2018 and 2022, respectively, and this comes as the latest round of high-profile job cuts at major American tech companies as firms hone in on their bottom lines. Musk, who is the third-richest person in the world according to our calculations, recently oversaw a total workforce reduction of 80% at X, the social media company formerly known as Twitter he also leads.
If Tesla’s upcoming earnings report due next Tuesday can help calm investors’ worst fears. Analysts expect Tesla to report its worst quarry profit since 2021 and worst quarterly revenue since 2022, according to FactSet data, offering a low bar for Tesla to clear.
