Tesla told employees Monday it will lay off 10% or about 14,000 people as it cuts costs, according to a New York Times article. 

Hours after Elon Musk sent an email to employees about the layoffs, two senior executives resigned via posts on X, the article says. 

“As we prepare the company for the next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” Musk said in the email that The New York Times claims to have reviewed. “There is nothing I hate more, but it must be done.” 

Drew Baglino, Tesla senior vice president of powertrain and energy, said via an X post that he made the decision to leave Sunday after working for the company for 18 years. 

“I loved tackling nearly every problem we solved as a team and feel gratified to have contributed to the mission of accelerating the transition to sustainable energy, a mission that I am quite passionate about,” Baglino said. 

Rohan Patel, head of Tesla Policy and Business Development, posted on X he was leaving Tesla after eight years with the company. 

“The past 8 years at Tesla have been filled with every emotion but the feeling I have today is utmost gratitude,” Patel posted. “To our unbelievable customers and fans — I’m inspired by your passion and impact on @Tesla and the mission.” 

The New York Times story states Tesla often cuts its workforce to remove employees who managers “consider weak.” However, it notes the number is typically smaller. 

Tesla recently reported a significant drop in vehicle deliveries for Q1 citing the production ramp of its updated Model 3, an arson attack at its Gigafactory Berlin, and the Red Sea conflict as partial reasons for the volume decline. 

The company produced 433,371 vehicles and delivered 386,810 during the first quarter, a press release says. 

It is the first Q1 decline for the company since 2020, according to Yahoo Finance. It also reported delivery and production are “well below” Q1 estimates for the company.

Tesla’s Q1 deliveries are a decrease from Q4 and year-over-year, Yahoo reports. 

Reuters also recently reported the company canceled its plans to build an inexpensive electric vehicle (EV). Instead, the company will turn its attention to a self-driving robotaxi. Tesla has denied this claim and says it plans to continue work on both projects. 

In recent months, Tesla has slashed prices on the Model Y and Model 3 as Chinese companies, such as BYD, do the same, according to Investor’s Business Daily. 

Late last month, Musk asked employees to sign up for additional shifts to help deliver cars to customers in the last days of the first quarter as the media was already suspecting the company might be seeing a decline in deliveries. 

Fisker, another fully EV automaker, has also seen a difficult Q1 as it sits on the brink of bankruptcy. The company’s stock was delisted last month and it announced the termination of a deal with a major automaker. This all followed the announcement that the company would suspend production for six weeks. 

Automakers seem to be sitting on a pivotal moment for EV development with some abandoning plans and others doubling down. 

Apple abandoned its EV plans while Stellantis announced layoffs in recent weeks layoffs of about 400 U.S. workers as it shifts focus to making a more affordable EV. 

BMW announced recently that it plans to spend more in research and development (R&D) than it ever has before in 2024 with a focus on electrification of its vehicle portfolio, in-car digital innovations, software stacks, and automated driving. 

As most major automakers seem to be focused on developing affordable smaller EVs, Nissan recently announced its plans to work with Mitsubishi on electric trucks as it pushes toward a goal of more electrification in future years. 

The shake-up in the EV world follows reports of the Biden administration relaxing its timeline for its push on EV production. A decision that has possibly caused states to also rethink their plans with Maine’s Board of Environmental Protection voting down a clean car program and Democrats and Republicans both sounding concerns about their state’s efforts. 

It is also still unknown how multiple global supply impacts could impact the OEMs including EV production in coming months, including the collapse of the Francis Scott Key Bridge in Baltimore, a major 7.2 earthquake in Taiwan, and conflicts in the Red Sea.

IMAGES

Photo courtesy of baileystock/iStock