Tesla is laying off about 10% of its global workforce due to decreased demand for electric vehicles and increased competition from China, according to a report on Monday.
The company plans to cut some 14,000 jobs out of its approximately 140,000 employees, and in a leaked message to employees on the Electrek website, CEO Elon Musk wrote, "Over the years, we have grown rapidly and opened several factories worldwide. Rapid growth has led to redundancies in roles and positions in some areas."
"As part of our preparations for the next phase of growth, it is crucial to examine every aspect of the company to reduce costs and increase productivity. As a result of these efforts, we have made the difficult decision to reduce the workforce by more than 10% globally."
Musk stated that the move would help the company stay innovative and hungry for the next growth cycle. The announcement of the layoffs came after Tesla reported its first quarterly sales decline in four years earlier this month. The company attributed the decline to factory closures due to disruptions in the Red Sea and a fire at a plant in Berlin.
Since July, the company's stock has dropped by over 40%, partly due to competition with Chinese company BYD, which surpassed Tesla in first-quarter sales. Tesla will release its first-quarter financial results next Tuesday.
Musk acknowledged in the letter that layoffs are the most hated thing he has to do but insisted they are necessary. However, after acquiring the social media platform X (formerly Twitter) in October 2022, he laid off nearly half of the employees.
"I want to thank everyone who is leaving Tesla for your hard work over the years. I am grateful for your contribution to our mission, and I wish you all the best in the future. It is very difficult to part ways," he wrote. "To those who remain, I want to thank you in advance for all the hard work that lies ahead of us. We are developing revolutionary technology in cars, energy, and artificial intelligence."