Signs of unrest at Tesla multiplied Monday after the electric car company told employees it would lay off more than 10 percent of its workforce to cut costs and two senior executives resigned.
The job cuts, which amount to about 14,000 people, come as the company faces increasing competition and declining sales. The management changes and layoffs are a reminder of the unpredictability of Elon Musk, Tesla’s chief executive, at a critical time for the company.
Mr. Musk has not outlined a plan to reverse a slump in auto sales and appears to be focusing on long-term ventures such as a self-driving taxi, rather than new models that would help Tesla compete with cars introduced by established automakers and new rivals from China.
“As we prepare the company for the next phase of growth, it is critically important that we look at every aspect of the company for cost reductions and productivity gains,” Mr. Musk told employees in a Monday morning email, a copy of which was reviewed. from the New York Times.
“There is nothing I hate more, but it has to be done,” he wrote.
Hours after that email, Drew Baglino, a senior vice president who played a big role in the company’s rise from a startup to a dominant electric car maker, said he was resigning.
“I made the difficult decision to leave Tesla after 18 years yesterday,” Mr. Baglino said in a post on X, the social networking site. Mr. Baglino is one of only three directors besides Mr. Musk listed as a top executive on the company’s website. His longevity was unusual in a company known for high management turnover.
Mr. Baglino may have been blamed for some of Tesla’s recent problems, said Gary Black, managing partner of investment firm Future Fund. “Somebody has to take the fall for the sharp slowdown in shipment growth, near-record inventories and shrinking margins, and it wasn’t going to be Elon,” Mr. Black told X.
Tesla also appeared to miss an executive key to winning regulatory approval for its self-driving technology. Rohan Patel, a former aide to President Barack Obama who headed Tesla’s policy and business development, tacitly confirmed reports that he was leaving. In a post on X, Mr. Patel thanked his colleagues and Mr. Musk for “the past eight years at Tesla.”
“My plans are to tutor my second grade daughter, practice my violin, go to a bunch of sporting events and take my very patient wife on some long-term travel,” Mr. Patel said. .
Investors often welcome job cuts because they can lead to higher profits. But that wasn’t the case Monday, as Tesla shares fell about 5% in afternoon trading.
Tesla regularly culls its workforce to remove employees whose performance managers deem weak, but the numbers are usually smaller. “This is something that Elon and Tesla have done consistently throughout his career,” said Scott Acheychek, chief executive of REX Shares, which offers funds that investors use to bet on or against Tesla stock. “Ten percent is too much,” added Mr. Acheychek.
Mr. Musk’s email to employees was reported earlier by Electrek, an online news website, and Handelsblatt, a German business newspaper.
Mr. Musk did not indicate where the cuts would be made. Many of Tesla’s workers are based at four major auto plants in Fremont, California, Austin, Texas, and Shanghai and nearby Berlin. Tesla also has a factory in Buffalo that makes charging equipment and a factory near Reno, Nev., that makes batteries.
Mr. Musk’s many other ventures, and his penchant for making polarizing political statements, have raised questions about his focus on running Tesla. Wall Street is increasingly worried about the company: Tesla’s share price has lost about a third of its value this year.
Many investors had hoped that Tesla would revive flagging sales by introducing a car that would sell for around $25,000 as early as next year, increasing the number of people who could buy the company’s cars and responding to competition from Chinese companies. that already sell electrics. cars for just half that price.
Mr Musk disputed those plans by announcing this month that Tesla would unveil a Robotaxi in August. The self-driving taxi is considered a long shot, in part because even the most advanced systems available today sometimes make glaring mistakes. In addition, federal and state regulators would have to sign off before Tesla could put such taxis on the market.
This month, Tesla reported a drop in sales that unnerved investors. The company said it delivered 387,000 cars worldwide in the first quarter, down 8.5 percent from a year earlier. It was the first time Tesla’s quarterly sales fell on a year-over-year basis since the start of the pandemic in 2020.
The company has cut prices significantly through 2023 to boost demand, which has cut into Tesla’s profits on each car. Last week, Tesla dropped the price of its more advanced driver assistance software to $99 a month from $199. But the price cuts seem to be losing their effectiveness. Tesla will report its financial results for the first quarter on April 23.
Rivals such as China’s BYD, Germany’s BMW and South Korea’s Kia and Hyundai Motor reported increases in electric vehicle sales for the same period, suggesting slower overall demand for battery-powered models was not the only explanation for the problems of Tesla.
Established companies are closing the gap with Tesla in battery technology and building new assembly lines to achieve the cost savings possible from mass production. Honda plans to start producing electric vehicles at a plant in Marysville, Ohio, next year.
Hyundai will begin producing electric cars at a new plant in Georgia in October, José Muñoz, president and general manager of Hyundai Motor worldwide, said in an interview last month. Hyundai will also begin allowing customers to buy cars on Amazon, a response to Tesla’s practice of selling cars online.
Mr Muñoz said customers were willing to pay more for Hyundai electric cars than for similar Teslas. “In the beginning, Tesla was premium,” he said. “Now we are premium.”
Jason Karaian and Melissa Eddy contributed to the report.
