Elon Musk has announced in a memo that Tesla is laying off about 10% of its staff in an effort to keep the company in a growth phase. Though this revelation has shocked some workers, others saw it coming thanks to workplace rumors.
These Tesla layoffs come as the car company has struggled in recent years, thanks to discouraging sales.
Elon Musk’s Memo
On Sunday, around midnight in California, Musk sent out an internal email to Tesla employees. In this memo, Tesla’s CEO announced that the company’s global workforce would have to be reduced by 10%.
Therefore, layoffs would be imminent. This memo was the first indication that Tesla would be laying off 10% of its global workforce, and news organizations quickly began to break the news.
Laid Off Workers
Workers at Tesla who were laid off also immediately received notice of their termination the same night. These workers were told through this email that their roles had been eliminated, and they would no longer be needed at work.
The email read, “Effective now, you will not need to perform any further work and therefore will no longer have access to Tesla systems and physical locations.”
Many Workers Were Blindsided
Many of these laid-off employees were completely blindsided — especially because they were laid off through an email. They weren’t even aware that their previous day of work was their last.
One former Tesla employee told Fox 8 News that they woke up to an email that said they were laid off. “It’s just crazy. It’s heartbreaking. It’s just a lot to take in within such little time,” they explained.
Why These Layoffs Occurred
According to Musk’s memo, these layoffs had to occur because the company had too many duplicate jobs.
“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,” Musk wrote in this memo.
Tesla’s Growth
Musk also talked about how Tesla needs to keep growing. However, the CEO explained that the company cannot grow unless these changes happen.
“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,” the memo read.
Musk Hates Layoffs
Musk also took the time to explain that he hates that he has to lay off his employees, writing, “As part of this effort, we have done a thorough review of the organization 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.”
However, Musk also noted that this decision will allow Tesla to be “lean, innovative and hungry for the next growth phase cycle.”
Workplace Rumors Warned Some Employees
While many Tesla employees were blindsided by this move, others had heard some workplace rumors and seen these layoffs coming.
Just this past weekend, employees began to speculate that layoffs would occur when rumors spread that managers were told to create a list of names of employees.
A Long Time Coming?
Rumors about layoffs have long been swirling around Tesla. Earlier this year in February, the company told certain managers to clearly determine which roles were business critical.
The company also had decided around this time to delay performance reviews of workers.
Job Cuts Amid Slowing Sales
These layoffs come as Tesla has recently struggled with slowing sales. Customers aren’t jumping at the chance to buy its EVs, which has discouraged sales in the first quarter.
There is no indication that this sales slump will change overnight. Therefore, the job cuts may have been to reorganize aspects of the company during this period of struggle.
Tesla Stocks Are Down
These job cuts also come as Tesla stocks remain down. The company’s stocks are currently down over 31% when compared to last year.
After the news about its layoffs made headlines, Tesla’s share price dropped by 1.2% on Monday in premarket trading.
Struggles Ahead for Tesla?
Already, analysts are claiming that this latest news could hint at more struggles ahead for Musk and Tesla. Dan Ives of Wedbush Securities warned that these layoffs aren’t good.
“This is an ominous signal that speaks to tough times ahead for Tesla as Musk navigated this Category 5 storm,” Ives stated. “Demand has been soft globally, and this is an unfortunately necessary move for Tesla to cut costs with a softer growth outlook.”
