Tesla management said The recent layoffs — which gutted some departments by 20% and even hurt high performance — are largely due to poor financial performance, a source familiar with the matter told TechCrunch on Monday.
The layoffs were announced to employees just one week before Tesla was scheduled to report its first-quarter earnings. The move comes as Tesla has seen its profit margin narrow over the past few quarters, as a result of an electric car price war that has been going on for at least a year. The company delivered a record 1.81 million vehicles in 2023. However, its margins took a hit after Tesla repeatedly cut prices in an attempt to boost sales and undercut competition.
Tesla informed employees that more than 10%, or about 14,000 workers, will be laid off across the global organization, which has operations in the United States, Europe and China. The layoffs, which affected employees across all departments and seniority levels, were made to reduce costs and increase productivity to prepare for the “next phase of growth,” according to an internal email from CEO Elon Musk seen by TechCrunch.
High performance is also cut
Many of the laid off employees were high performers, according to two sources who spoke to TechCrunch on the condition of anonymity. One source expressed shock at the number of talented employees being cut and noted that many of those affected were working on projects that had fallen down Tesla's list of priorities. The source refused to specify the projects.
Some departments have seen layoffs exceeding the 10% outlined in the company-wide email, according to sources. One manager told TechCrunch that 20% of their employees were laid off.
“I lost 20% of my team, and some good players as well,” they said.
The change also comes as Musk continues to shift the company's path toward building fully self-driving cars. Tesla recently dropped plans to build a low-cost electric car that would sell starting at around $25,000, choosing instead to use the platform being developed to power an alleged robotaxi that Musk said would debut on August 8.
Musk previously tried to prioritize a robotaxi project, according to his biographer, Walter Isaacson. In 2022, he told employees he wanted a “clean robotaxi” with no steering wheel or pedals. Tesla's chief designer, Franz von Holzhausen, and engineering vice president Lars Moravy continued to secretly manage the low-cost electric car project, eventually convincing him to make both — that is, until last week when it was reported that Musk had changed his mind.
Top executives are leaving
Two prominent executives have also left the company – Drew Baglino, Tesla's senior vice president of powertrain and energy, and Rohan Patel, vice president of public policy and business development.
Patel told TechCrunch that he decided on Sunday evening to leave Tesla because “[b]“Comprehensive changes” in the company. Patel, who has been regularly interacting with Tesla customers and fans on X in recent months, declined to be specific. “It is better for me not to speculate,” he noted in a letter. He added: “Tesla will be stronger than ever, and change is good.”
Baglino told TechCrunch that after 18 years, it was time to leave Tesla. “I feel good about the impact I've been able to make, my leadership team is strong, the energy companies I lead are doing well, etc.,” he wrote in a message to TechCrunch.
Sandeep Rao, head of research in London, said: “Baglino was responsible for new powertrains and battery projects, and there is a feeling that there is not a lot of sustainable innovation at this stage, and this may be the reason for Baglino’s departure.” The Leverage Shares-based financial services company was profiled in an interview with TechCrunch.
Baglino's departure comes just a few months after Tesla's former CFO, Zachary Kirkhorn, resigned. In January, Musk posted on . In artificial intelligence and robotics.
