Tesla may lay off employees, and managers have been asked to identify which employees' positions are critical. People familiar with the matter, who asked not to be named because the information is not public, said Tesla's U.S. managers will have to conduct a review of deputy positions in the near future. Some sources revealed that Tesla asked management to evaluate the necessity of each position after canceling the semi-annual performance appraisal of some employees.
Musk has been emphasizing cost cutting as Tesla's sales growth slows. The CEO, who has always been known for his ruthlessness, issued an ultimatum to Twitter employees at the end of 2022, either to "harden" or resign.
Tesla representatives did not respond to a request for comment. Tesla is down 26% year to date.
Tesla’s headcount has roughly doubled since 2020. As of the end of last year, the total number of employees worldwide exceeded 140,000. The company now has about eight times as many employees as it did in 2016. 2016 was the year before Model 3 was released.
Although Tesla has made some layoffs, the company's headcount increased by nearly 10% last year. In February 2023, Tesla laid off dozens of employees in Buffalo, New York, but the automaker denied it was because these people launched a union movement that week.
Tesla has invested heavily in next-generation electric vehicles and other growth initiatives, with a capital expenditure budget of more than $10 billion this year. Analysts also expect the company to increase research and development spending to about $4.5 billion.
Tesla warned last month that there was little room for cost reductions in its existing product lines as capital spending and research and development spending increased.
"We have a strong team that is very focused on this," Chief Financial Officer Vaibhav Taneja said on the company's Jan. 24 earnings call.