Sources say Tesla layoffs hit high performers, cut some departments

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Tesla management told A source familiar with the matter told TechCrunch that employees said on Monday that the recent layoffs — which hit some departments by as much as 20% and affected even high performers — were primarily due to poor financial performance. There was a reason.

The layoffs were announced just a week before Tesla reported its first-quarter earnings. The move comes as Tesla has seen its profit margins shrink over the past several quarters, the result of an EV price war that has continued 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 to boost sales and fend off competition.

Tesla informed employees that more than 10%, or about 14,000 employees, would be laid off across the global organization with operations in the United States, Europe and China. According to an internal email from CEO Elon Musk seen by TechCrunch, the layoffs, which affected employees across all departments and seniority levels, were made to reduce costs and increase productivity in preparation for the “next phase of growth.” .

High performers also made the cut

According to two sources who spoke to TechCrunch on condition of anonymity, many of the laid-off employees were high performers. One source expressed surprise at the cut in the number of talented employees and said that many of those affected were working on projects that have fallen down on Tesla's priority list. The source declined to specify which projects.

According to sources, some departments saw layoffs of more than 10% as outlined in the companywide email. One manager told TechCrunch that 20% of his workforce has been cut.

“I lost 20% of my team, some very good players too,” he said.

The change comes even as Musk continues to steer the company's trajectory toward building fully self-driving cars. Tesla recently abandoned plans to build a low-cost EV that would start at around $25,000, opting instead to use the underlying platform it is developing to power a purported robotaxi, which is being described as Musk said that it will start on August 8.

According to his biographer Walter Isaacson, Musk had previously tried to prioritize a dedicated robotaxi vehicle project. In 2022, he told employees he wants a “clean robotaxi” with no steering wheels or pedals. Tesla lead designer Franz von Holzhausen and engineering VP Lars Morawi secretly ran a low-cost EV project and eventually convinced both of them to build it — that is, until last week when it was reported that Musk had changed his mind.

top officials left

Two high-profile executives – Drew Baglino, Tesla's SVP of powertrain and energy, and Rohan Patel, VP of public policy and business development – ​​also left the company.

Patel told TechCrunch that he decided to leave Tesla on Sunday evening because “[b]Ig overall change in the company”. Patel, who has been regularly connecting with Tesla customers and fans on X in recent months, declined to get specific. “It would be better for me not to speculate,” he said in a message. “Tesla is going to be stronger than ever and change is good,” he said.

Baglino told TechCrunch it was time to leave Tesla after 18 years. “I feel good about the impact I have been able to achieve, my leadership team is strong, the energy businesses I am responsible for are performing well, etc.,” he wrote in a message to TechCrunch. “

“Baglino was in charge of the powerdrive and new battery projects, and it seems that too much innovation is not sustainable at this time, which is probably why Baglino is leaving,” said Sandeep Rao, head of research in London. based financial services company Leveraged Shares, theorized in an interview with TechCrunch.

Baglino's departure comes just months after Tesla's previous CFO Zachary Kirkhorn stepped down. In January, Musk posted onFormerly Twitter, that he wants about 25% voting control of Tesla to focus more on the company rather than its other companies, and will help the EV-maker become a leader in AI and robotics.