Inside Tesla’s chaotic month of brutal layoffs

Since Musk’s announcement, the layoffs at Tesla have been ongoing. Several executives at the company have departed and Tesla workers say morale is flagging.

Here’s a rundown of what led to the layoffs and what’s happened since Tesla kicked off the cuts.

Tesla faces headwinds

Ahead of the layoffs, Tesla’s delivery numbers slumped, falling below Wall Street’s estimates. Tesla deliveries in the first quarter fell 20% from the previous quarter and more than 8% from the same time the previous year, marking the company’s first year-on-year sales decline since 2020.

In a press release, Tesla blamed the decline in deliveries on its production ramp for its refreshed Model 3, an arson attack at its factory near Berlin, and supply-chain issues caused by the Red Sea conflict.

Tesla and other automakers are grappling with slower demand for their EVs. Musk had warned earlier in 2024 that the company was “between two major growth waves” as rising interest rates and economic uncertainty shake the market.

At the same time, Tesla is battling to compete with electric car companies in China — the largest EV market in the world. Chinese company BYD even briefly overtook Tesla to become the world’s top seller of electric vehicles in January.

More on the EV slowdown:

The cuts commence

Before Musk notified staff of the mass layoff, workers had been wary of impending cuts.

In February, Bloomberg reported that the carmaker called for managers to begin identifying the most vital roles for the company. At the time, Tesla also delayed some workers’ performance reviews, Bloomberg reported. The reviews were later rescheduled, three sources told BI.

The day before the cuts kicked off, rumors circulated within the company that the billionaire planned to eliminate as much as 20% of its workforce. Tesla workers hadn’t seen such a deep cut since 2022 when Tesla slashed 10% of its salaried staff.

On April 15, the hammer fell when Musk announced the company was eliminating more than 10% of its employees.

Musk said the layoff resulted from the “duplication of roles and job functions in certain areas.”

“There is nothing I hate more, but it must be done,” Musk wrote, according to a copy of the memo that was viewed by Business Insider. “This will enable us to be lean, innovative and hungry for the next growth phase cycle.”

By the next day, hundreds of workers learned they’d been impacted by the cuts when they were locked out of Tesla’s internal systems and received a “Dear Employee” memo to their personal email accounts. Other employees only learned they’d been laid off when their badge didn’t work at a Tesla facility on Monday morning.

During Tesla’s earnings call on April 23, Musk said Tesla needs to reorganize for its next phase of growth.

“We’re not giving up anything that significant that I’m aware of,” Musk said during the call.

More on Tesla’s first week of layoffs:

Layoff notices continue to go out in waves

After Tesla started notifying workers who had been laid off on April 16, they didn’t stop. Later that week, the cuts hit Tesla’s recruiting team. In the weeks that followed, Musk cut Tesla’s US advertising team and reportedly chose to slash Tesla’s entire Supercharging team, as well as its vehicle programs and new product introduction team.

On May 6, workers at the company entered their fourth straight week of layoff notices as Tesla cut staff from teams that had been previously impacted in the first wave of layoff notices, five sources told BI.

Amid the cuts, several executives have taken leave of the company — from Tesla’s former senior director of human resources to its SVP of powertrain and electrical engineering. On Wednesday, Tesla’s former head of new product launches said he’d chosen to resign because the layoffs had thrown the company “out of balance.”

The resignations and cuts have further consolidated Musk’s power at Tesla. The CEO now has 35 direct reports, according to The Information. He also chose to relocate Tesla’s second-in-command Tom Zhu back to China.

Meanwhile, as the cuts continue, workers say they’re waiting for the billionaire to finally call a cease-fire.

“I keep waiting for Elon to send another email and tell us they’re finally done firing people,” one current Tesla worker, who requested anonymity to speak on the conditions of their employment, said. “We need some level of closure or a sign that we can stop worrying about losing our jobs.”

More on the ongoing layoffs:

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