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Tesla has confirmed it will lay off more than 10% of its global workforce.

In a memo to employees, CEO Elon Musk described the layoffs as a necessary step due to overlapping roles and functions that have emerged during the company’s rapid expansion. He emphasized the need for cost reductions and enhanced productivity to prepare Tesla for future growth phases.

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Musk elaborated on the decision in the memo, noting, “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.” He also expressed gratitude towards the employees who remain, acknowledging the challenges that lie ahead in developing cutting-edge technologies across automotive, energy, and AI sectors.

The layoffs were first reported by Electrek, shortly after Tesla experienced its first quarterly drop in vehicle deliveries since 2020—a decrease of 8.5%. This decline was attributed to disruptions in the supply chain due to Houthi attacks on shipping in the Red Sea and an arson incident at a German production facility.

Amidst these operational challenges, Tesla also faces changes in its leadership team. Senior Vice President of Powertrain and Energy Engineering, Andrew Baglino, announced his departure after 18 years with the company, followed by Rohan Patel, the Senior Global Director of Public Policy and Business Development, who also decided to leave after eight years.

As the news broke, Tesla’s stock fell more than 5%, continuing a downward trend that has decreased the company’s market value significantly this year.

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