Apr 15, 2024 - Economy

Tesla trims down

Illustration of a flat tire leaking air with the Tesla logo on it

Illustration: Sarah Grillo/Axios

Tesla is cutting 10% of its workforce — and multiple executives are departing — as the company grapples with middling electric vehicle sales.

Why it matters: Tesla is the world's largest maker of premium EVs, but the company recently reported its lowest quarterly sales since 2022.

CEO Elon Musk told employees in an email that the move stemmed from a need to cut costs and bolster productivity.

  • "There is nothing I hate more, but it must be done," Musk said in the email. "This will enable us to be lean, innovative and hungry for the next growth phase cycle."
  • Drew Baglino, Tesla's SVP of powertrain and energy, and public policy exec Rohan Patel both said on X that they're also leaving.

Context: The automaker — which had about 140,000 employees as of January — delivered 386,810 vehicles worldwide in the first quarter, down 8.5% from the same period a year earlier.

  • Analysts had expected deliveries of 443,000, according to Evercore ISI's Chris McNally.

Between the lines: The cuts reflect Tesla's pivot to shoring up profits while it aims for a sales turnaround.

  • "Tesla has historically adjusted its workforce based on its strategy, hiring during periods of growth and reducing headcount during slowdowns," Morningstar equity strategist Seth Goldstein wrote Monday.

Reality check: The problem is that amid signs of "EV winter," Tesla doesn't have much hope for significant revenue growth until it delivers a next-generation vehicle — dubbed the Model 2 — or robotaxis.

  • Reuters recently reported that the Model 2 has been canceled, though Musk denied that.
  • Shortly after that report, he said the company would debut a robotaxi on Aug. 8, but it could be years before it contributes to the bottom line.

What to watch for: Tesla reports earnings on April 23.

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This story was an excerpt from Axios Closer, a recap on the day's biggest business stories.

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