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Tesla cuts 10% of its workforce in global efficiency drive

A Tesla logo is seen on a vehicle on display in Austin, Texas, Feb. 22, 2023.
A Tesla logo is seen on a vehicle on display in Austin, Texas, Feb. 22, 2023. Copyright Eric Gay/Copyright 2023 The AP. All rights reserved
Copyright Eric Gay/Copyright 2023 The AP. All rights reserved
By Indrabati Lahiri
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Tesla's drastic layoffs may be a response to changes needed in the wake of the disappointing last quarterly delivery report.

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Electric vehicle giant Tesla has announced it is to lay off 10% of its staff worldwide.

Tesla currently employs some 140,400 staff which means around 14,000 jobs will go. The reason given is to cut out a number of positions and also to get rid of roles that are currently being duplicated.

In a company-wide email, CEO Elon Musk said, as reported by Electrek: "Over the years, we have grown rapidly with multiple factories scaling around the globe. With this rapid growth, there has been duplication of roles and job functions in certain areas.

"As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity.

"As part of this effort, we have done a thorough review of the organisation and made the difficult decision to reduce our headcount by more than 10% globally. There is nothing I hate more, but it must be done. This will enable us to be lean, innovative and hungry for the next growth phase."

Several warning signs of an impending decision have been seen over the past few months, with the company asking various managers to decide on key team members who might be targets.  

Other signs included calling off certain annual reviews and stopping select stock rewards. Following the announcement, some employees reported already losing access to the company's systems.

Why has Tesla laid off so many employees?

Tesla's drastic move follows on from a disappointing last quarterly report. The company revealed there that it had failed to meet delivery expectations by a sizeable margin, and had also seen a surprising sales reduction compared with last year's figures.

That was mainly due to Chinese sales falling drastically, especially as Chinese EV maker recently overtook Tesla in battery-only car sales in the last quarter of 2023. Other Chinese EV makers have also been given Tesla a harder time in the Chinese market due to considerably cheaper and easier to customise. 

Tesla has slashed production at its Shanghai Gigafactory, and has also cut the number of production shifts for the Cybertruck, at its Texas Gigafactory.  

The company earlier revealed growth was likely be subdued until the launch of new and next-generation products such as the newly unveiled robotaxi. Designers had been holding on to hopes of a $25,000 (€23,480) electric vehicle but the company now seems to have shelved that in favour of the robotaxi.

Elon Musk's personal reputation may also be taking a hit on the company, with more investors pulling out, spooked by his controversies in the public media.

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