Tesla management said Employees on Monday that the recent layoffs — which have decimated some divisions by 20% and hit even high performers — were largely due to poor financial performance, a source familiar with the matter told TechCrunch.
The layoffs were announced to staff just a week before Tesla is scheduled to report first-quarter earnings. The move comes as Tesla has seen its profit margin shrink in recent quarters, the result of an EV price war that has been going on for at least a year. The company delivered a record 1.81 million vehicles in 2023. Its profit margins, however, took a hit after Tesla repeatedly cut prices in an effort to boost sales and undercut the competition.
Tesla informed employees that more than 10%, or about 14,000 workers, will be laid off across the global organization with operations in the United States, Europe and China. In a regulatory filing, Tesla referred to the layoffs as a “company-wide restructuring.” The layoffs, which affected employees across all divisions and seniority levels, were made to cut costs and increase productivity to prepare for its “next phase of growth,” according to an internal email from CEO Elon Musk that saw TechCrunch.
High performances are also cut
Many of the laid-off employees were high performers, according to two sources who spoke to TechCrunch on condition of anonymity. A source expressed shock at the number of talented employees being cut and noted that many of those affected were working on projects that have fallen lower on Tesla’s priority list. The source declined to specify which projects.
Some departments saw layoffs beyond the 10 percent outlined in the company email, according to sources. One manager told TechCrunch that 20% of his employees were cut.
“I lost 20% of my team, some very good players too,” they said.
The revamp also comes as Musk continues to bend the company’s path toward making fully autonomous cars. Tesla recently abandoned plans to build a lower-cost EV that would start at around $25,000, opting instead to use the underlying platform being developed to power a purported robotaxi that Musk said would debut on 8 August.
Musk previously tried to prioritize the dedicated robotaxi vehicle project, according to his biographer, Walter Isaacson. In 2022, he told employees he wanted a “pure robotaxi” with no steering wheel or pedals. Tesla chief designer Franz von Holzhausen and vice president of engineering Lars Moravy continued to run the low-cost EV project in secret and eventually convinced him to do both — that is, until last week, when Musk reportedly changed his mind.
Top executives are leaving
Two high-profile executives — Drew Baglino, Tesla’s vice president of Powertrain and Energy, and Rohan Patel, vice president of Public Policy and Business Development — also left the company.
Patel told TechCrunch that he decided Sunday afternoon to leave Tesla because of “[b]ig general changes’ to the company. Patel, who has regularly interacted with Tesla customers and fans at X in recent months, declined to be specific. In a message he noted that “it would be better not to speculate. … Tesla will be stronger than ever and change is good,” he added.
Baglino told TechCrunch that after 18 years, it’s time for me to leave Tesla. “I feel good about the impact I’ve been able to achieve, my leadership team is strong, the energy businesses I’m responsible for are doing well, etc.,” he wrote in a message to TechCrunch.
“Baglino was responsible for powerdrives and new battery projects, and there’s a sense that there’s not a lot of innovation that’s sustainable at this point, which is probably why Baglino is leaving,” said Sandeep Rao, head of research in London – based on financial services firm Leverage Shares, he theorized in an interview with TechCrunch.
Baglino’s departure comes just months after the resignation of Tesla’s previous CFO, Zachary Kirkhorn. In January, Musk posted on Xex-Twitter, that he would like to have about 25% voting control of Tesla in order to focus more on the company, rather than his other companies, and help the EV maker become a leader in artificial intelligence and robotics.
This article has been updated to include information from a regulatory filing referring to the layoffs as a “restructuring.”
