Elon Musk Says “There’s Nothing More I Hate, But it Must Be Done” as He Announces a Massive 15,000 Employee Tesla Job Cut – Adds “It is Very Difficult to Say Goodbye”

Over the weekend, Tesla has started massive job cuts that will reduce the company’s headcount by over 15,000. Musk has reached out to affected employees, stating that “it’s very difficult to say goodbye, but it must be done.”

In the past few years, Tesla has grown massively as a company. The EV maker, which a few years ago was barely able to produce 100,000 vehicles a year, in 2023, was able to increase this number to 1.8 million vehicles.

The Model Y is currently the best-selling vehicle in the world, outselling both all-electric and internal combustion vehicles with a starting price half that of the Model Y.

While all the growth over the past few years has been exciting, it appears that Tesla has reached a saturation point in the company, and growth will not come as easily anymore.

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In 2020, Tesla set out to grow vehicle production annually by 50% for the foreseeable future. Tesla said that the EV maker will surpass this number in some years, and in others, the growth will be below 50%.

However, in the long term, Tesla is guided to hit a 50% compound annual growth rate (CAGR), which will eventually allow Tesla to reach a production rate of 20 million vehicles annually by 2030.

This is one of the most ambitious growth projections by any large company in the S&P 500. Tesla’s long-term growth plans and near-term impeccable execution have propelled the company to become more valuable than the next ten biggest automakers combined at one point.

All this was good and well; however, over the past couple of quarters, signs are starting to emerge that Tesla’s unabated growth is starting to slow down.

In the first quarter of the year, Tesla revealed that vehicle deliveries for Q1 2024 have fallen by a massive 20%.

Some Tesla investors blamed Elon Musk’s online antics for the decrease in deliveries and for damaging Tesla’s brand, leading Musk to react aggressively to these allegations.

In addition to the name-calling, Musk claimed this quarter was an outlier and assured Tesla investors that deliveries should be back on track.

 

However, today, despite the wishes of Tesla bulls, Tesla is starting to bunker down as a company for a possible extended growthless period.

Late last night, reports started to emerge that Tesla is planning a massive job cut that could reduce the company’s headcount by over 20%.

Given the magnitude, we considered the reports baseless rumors and passed on reporting them; however, an official Tesla memo written by Elon Musk himself has leaked, confirming the massive job cuts.

Initial reports claimed that the job cuts would affect 20% of Tesla’s workforce; however, Musk’s email only states that Tesla has decided to reduce the company’s workforce “by more than 10% globally.”

Musk’s email, in its entirety, reads…

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. 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.

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. This will enable us to be lean, innovative, and hungry for the next growth phase cycle.

I would like to thank everyone who is departing Tesla for their hard work over the years. I’m deeply grateful for your many contributions to our mission and we wish you well in your future opportunities. It is very difficult to say goodbye.

For those remaining, I would like to thank you in advance for the difficult job that remains ahead. We are developing some of the most revolutionary technologies in auto, energy, and artificial intelligence. As we prepare the company for the next phase of growth, your resolve will make a huge difference in getting us there.

Thanks,

Elon

This email was shared online and appears to have originated from a Tesla employee in China. As you can read above, Musk has left no doubt about the job cuts.

What’s interesting is that Musk says the job cuts will affect “more than 10% of employees globally.” However, we are unsure whether this means 11% or 19%.

Whatever the final number for these massive job cuts, some areas will undoubtedly be unaffected, while other job descriptions or geographic areas will be massively impacted.

This means some Tesla geographic locations or job descriptions will undoubtedly suffer more than 20% job cuts.

Watch How Tesla Employees Where Laid Off

 

As of the end of 2023, Tesla reported directly employing more than 140,000 people worldwide. Although we do not have the final number, Tesla undoubtedly added more employees over the year's first three months.

We expect Tesla’s headcount to be around 150,000 by now, and a 10% job cut implies that Tesla is firing 15,000 employees today.

What does this massive 15,000 job cuts mean for Tesla’s growth?

In its last earnings letter and call, Tesla said, "The company is between two massive growth waves.”

Tesla is trying to say that the EV maker has reached the full potential of the Model 3 and Model Y programs, which were Tesla’s first foray into becoming a mass-market automaker.

However, Tesla has yet to start producing the company’s next-generation vehicle, which is expected to be a cheaper $25,000 vehicle for the masses.

Recent hints from Elon Musk suggest that the next-generation Tesla vehicle will be another major departure from how every other vehicle on the road is designed. Musk has said that the Tesla “robotaxi” unveiling will be held on August 8.

With the Model Y growing to become the best-selling vehicle in the world and Tesla’s next-generation vehicle not yet out on the roads, it appears that Tesla will be reporting lackluster growth numbers for the next several quarters.

When will Tesla return to growth?

Although details about Tesla’s next-generation vehicle are sparse, we know that the EV maker is looking at massive production numbers thanks to supplier leaks.

What we know so far suggests that once fully ramped, Tesla plans to produce 4 to 5 million next-generation vehicles in a year.

For context, the world's best-selling vehicle, the Tesla Model Y, reached a peak production rate of 1.2 million vehicles a year in 2023.

Tesla plans to supersede its record for its next-generation vehicle by an incredible 4 to 5 folds over what the EV maker already achieved with the Model Y.

How will the job cuts affect Tesla’s financials?

Cutting these many employees and offering severance packages in the short term will undoubtedly have a negative impact on Tesla’s financials.

However, as Elon Musk stated, this move will reduce costs and allow Tesla to remain a much more nimble and hungry company, massively helping earnings in the long term.

Tesla will post its financial results for the first quarter of 2024 after market close on Tuesday, April 23, 2024. We will undoubtedly receive more details regarding these job cuts and Tesla’s long-term growth plans.

We will be sure to keep you posted once we receive more information from Tesla. Until then, visit our site, torquenews.com/Tesla, regularly for the latest updates.

So, what do you think? Are you surprised that Tesla has decided to let go of 15,000 employees at once? How do you think this move will affect Tesla’s long-term growth plans? Let us know your thoughts in the comments below.

Image: Courtesy of Tesla, inc.

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Tinsae Aregay has been following Tesla and The evolution of the EV space on a daily basis for several years. He covers everything about Tesla, from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.