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Tesla layoffs hit high-performing employees and cut some departments, sources say

Tesla management told On Monday, employees said the latest round of layoffs — which cut as much as 20% in some departments and hit even high-performing employees — was largely due to poor financial performance, a person familiar with the matter told TechCrunch.

The layoffs were announced to employees just a week before Tesla was scheduled to report first-quarter earnings. The move comes as Tesla’s profit margins have been narrowing over the past few quarters, the result of an electric vehicle price war that has lasted at least a year. The company delivered a record 1.81 million vehicles in 2023. However, the company’s profit margins have taken a hit after Tesla repeatedly slashed prices to boost sales and undercut competitors.

Tesla informed employees that the global organization with operations in the United States, Europe and China will lay off more than 10% of its employees, or approximately 14,000 employees. An internal email from CEO Elon Musk seen by TechCrunch revealed that the layoffs, which affect employees across all departments and seniority levels, are intended to reduce costs and increase productivity for “the next phase of “Be prepared for growth.”

High performers also cut

Many of the fired employees were high performers, according to two sources who spoke on condition of anonymity. One source expressed shock at the number of layoffs, noting that many of the affected employees were working on projects lower on Tesla’s priority list. The sources declined to identify specific projects.

According to sources, the layoffs in some departments exceeded the 10% outlined in the company-wide email. One manager told TechCrunch they laid off 20% of their staff.

“I lost 20 per cent of the team and some very good players,” they said.

The reorganization also comes as Musk continues to change the company’s trajectory toward developing fully autonomous vehicles. Tesla recently abandoned plans to build a low-cost electric car that would retail for about $25,000, instead opting to use the underlying platform it was developing to power so-called robotaxis that Musk says will be available in 8 Debuts on May 8th.

According to Musk’s biographer Waterler Isaacson, Musk has previously tried to prioritize a dedicated robot taxi project. In 2022, he told employees he wanted a “clean robotaxi” without a steering wheel or pedals. Tesla chief designer Franz von Holzhausen and vice president of engineering Lars Moravy had been running the low-cost electric car project in secret and finally convinced He was producing both projects simultaneously — until last week reports surfaced that Musk had changed his mind.

Executive departures

Two high-profile executives — Tesla senior vice president of powertrain and energy Drew Baglino and vice president of public policy and business development Rohan Patel — also Left the company.

Patel told TechCrunch he decided to leave Tesla on Sunday night because “[b]ig overall changes at the company.” Patel has been regularly interacting with Tesla customers and fans on Let’s speculate.” “Tesla will be stronger than ever and change is good,” he added.

Baglino told TechCrunch that after 18 years, it was time to leave Tesla. “I’m pleased with the impact I’ve made, my leadership team is strong, the energy business I’m responsible for is performing well, etc.,” he wrote in a message to TechCrunch.

“Baglino was responsible for the power drive and new battery projects, and there isn’t much sustainable innovation at the moment, which may be why Baglino is leaving,” said Sandeep Rao, head of research at London headquarters. Leverage Shares, a financial services company, theorized in an interview with TechCrunch.

Baglino’s departure comes months after former Tesla CFO Zachary Kirkhorn resigned. in January, Musk posted on Xthe former Twitter user said he wants to have about 25% of Tesla’s voting control to focus more fully on the company rather than his other companies and help the electric car maker become a leader in artificial intelligence and robotics By.

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