Signs of unrest at Tesla mounted Monday after the electric car company told employees it would cut more than 10 percent of its workforce to cut costs and two senior executives resigned.
The job cuts, which amount to about 14,000 people, come as the company faces increased competition and declining sales. The management changes and layoffs are a reminder of the unpredictability of Elon Musk, Tesla’s chief executive, at a critical time for the company.
Mr. did not outline. Musk has a plan to reverse declining car sales, and he appears to be focusing on long-shot ventures like a self-driving taxi, rather than new models that would help Tesla compete with cars. introduced by established carmakers and new rivals from China.
“As we prepare the company for the next phase of growth, it is very important to look at every aspect of the company for cost reductions and productivity increases,” said Mr. Musk to employees in an email Monday morning, a copy of which was reviewed by The New York Times.
“There’s nothing I hate more, but it has to be done,” he wrote.
Hours after that email, Drew Baglino, a senior vice president who played a major role in the company’s rise from startup to dominant electric car maker, said he was resigning.
“I made the difficult decision to move on from Tesla after 18 years yesterday,” Mr. Baglino said in a post on X, the social media site. Mr. Baglino is one of only three managers besides Mr. Musk listed as a top executive in the company website. His longevity is unusual in a company known for high management turnover.
Mr. may be blamed. Some of Tesla’s recent problems are confusing, said Gary Black, managing partner of Future Fund, an investment firm. “Someone has to take the fall for the sharp slowdown in shipments growth, near record inventories, and declining margins and it won’t be Elon,” Mr. Black on X.
Tesla also appears to be missing an executive key to winning regulatory approval for self-driving technology. Rohan Patel, a former aide to President Barack Obama who is Tesla’s head of policy and business development, has privately confirmed reports that he is leaving. In a post on X, Mr. Patel his co-workers and Mr. Musk for “the past eight years at Tesla.”
“My plans are to be a recess monitor for my daughter in second grade, practice my violin, go to a bunch of bucket list sporting events and take my long-suffering wife on some long-awaited trips,” said Mr. Patel.
Investors often welcome job cuts because they can lead to higher profits. But that wasn’t the case on Monday, with Tesla shares ending the day up more than 5 percent.
Tesla regularly retrenches its work force to lay off employees deemed by performance managers to be underperforming, but the numbers are usually smaller. “This is something that Elon and Tesla have been doing consistently throughout his career,” said Scott Acheychek, chief executive of REX Shares, which offers funds that investors use to bet on or against Tesla stock. . “Ten percent is pretty big,” Mr. Acheychek added.
The email of Mr. Musk to the employees was previously reported by Electrek, an online news site, and Handelsblatt, a German business newspaper.
Mr. did not indicate Musk where to make the cuts. Many of Tesla’s workers are based at four major car factories in Fremont, Calif., Austin, Texas, and Shanghai and near Berlin. Tesla also has a factory in Buffalo that makes charging equipment and a factory near Reno, Nev., that makes batteries.
The layoffs could help the United Automobile Workers union’s efforts to organize Tesla employees in the United States. A company’s workers may be more open to unionizing if they believe that representation will provide them with more job security. Workers at a Volkswagen factory in Tennessee will vote this week on joining the UAW, and Mercedes-Benz workers in Alabama will vote next month.
The many other adventures of Mr. Musk, and his penchant for making polarizing political statements, has raised questions about his focus on Tesla management. Wall Street is increasingly worried about the company: Tesla’s share price has lost nearly a third of its value this year.
Many investors have expressed hope that Tesla will revive flagging sales by introducing a car that will sell for around $25,000 next year, increasing the number of people who can afford the cars. of the company and is responding to competition from Chinese companies that already sell electric cars for as little as half the price tag.
Mr. doubted. Musk furthered those plans by announcing this month that Tesla will release a Robotaxi in August. Self-driving taxis are seen as a long shot, in part because even the most advanced systems available today can sometimes make glaring mistakes. In addition, federal and state regulators have to sign off before Tesla can put such taxis on the road.
This month, Tesla reported a drop in sales that caught investors off guard. The company said it delivered 387,000 cars worldwide in the first quarter, down 8.5 percent from a year earlier. This is the first time that Tesla’s quarterly sales have fallen every year since the start of the pandemic in 2020.
The company cut prices significantly in the course of 2023 to increase demand, which lowered Tesla’s profit per car. Last week, Tesla cut the price of its most advanced driver-assistance software to $99 a month from $199. But the price cuts appear to be waning. Tesla will announce its financial results for the first quarter on April 23.
Rivals such as China’s BYD, Germany’s BMW, and South Korea’s Kia and Hyundai Motor reported increases in electric vehicle sales for the same period, suggesting that slower overall demand for in battery-powered models is not the only explanation for Tesla’s problems.
Established companies are closing the gap on Tesla in battery technology, and building new assembly lines to achieve the cost savings made possible by mass production. Honda plans to start producing electric vehicles at a factory in Marysville, Ohio, next year.
Hyundai will begin producing electric vehicles at a new factory in Georgia in October, José Muñoz, Hyundai Motor’s president and global chief operating officer, said in an interview last month. Hyundai will also begin allowing customers to buy cars on Amazon, a response to Tesla’s practice of selling cars online.
Mr. Muñoz said customers are willing to pay more for Hyundai electric cars than similar Teslas. “In the beginning, Tesla was premium,” he said. “Now we are premium.”
Jason Karaian and Melissa Eddy contributed reporting.
