US automaker Tesla is cutting jobs in two of its biggest markets – the US and China, across sales, tech, and engineering, sources told Reuters. The company’s CEO Elon Musk told staff in an internal memo that the company is laying off more than 10% of its global workforce, as it grapples with falling sales and an intensifying price war for electric vehicles.
Several of the company’s service centres based in the US saw heavy layoffs effective immediately, primarily among sales staff and technicians whereas another location laid off all front-of-house staff. A Tesla programme manager in California posted a spreadsheet on LinkedIn of over 140 staff, mostly engineers, who had been laid off and were seeking new jobs.
Other sources revealed that members of Tesla’s China sales team were also being notified about their redundancy, with more than 10% losing their jobs. Another source said that in Shanghai, where Tesla‘s largest plant is located, the company will only lay off a small proportion of staff, amounting to “several dozen” people. Shares of the company fell 4% to USD 154.82 on Tuesday after closing down 5.6% on Monday.
As per analysts at JP Morgan, “The sweeping layoffs… should now leave no doubt that the decline in deliveries has been a function of lower demand and not supply,” adding that it “has far-reaching implications for the hypergrowth narrative still embedded in Tesla’s share price”.
At Tesla‘s German plant, of approximately 12,000 staff, 3,000 staff have reportedly been fired. However, the company refuted the reports in German media and said it was evaluating how to implement Musk’s orders at the plant. “We will pursue the measure for Gigafactory Berlin-Brandenburg against the background of all labour law and co-determination requirements, bringing in the works council,” Tesla Germany told Reuters, adding no workers had been notified yet.
However, the German union IG Metall said that Tesla had not informed or consulted the works council, as it is customary in Germany, prior to emailing all staff. Also, while German labour law has strict rules on firing staff, around 1,000 workers at the plant are on temporary contracts, leaving them more vulnerable to dismissal.