Signs of turmoil at Tesla continued after the company told employees Monday it would lay off more than 10% of the workforce to cut costs. Two senior executives also resigned.
The job cuts, which amount to about 14,000 people across the company’s global operations, will be felt in Austin, where Tesla is one of the biggest employers.
Bob Sechler, the assistant managing editor at the Austin Business Journal, said it is not entirely clear how those layoffs will play out for Austin-based Tesla employees. The company employed nearly 23,000 people at its plant in eastern Travis County as of the end of 2023 and is also building facilities in Buda and Kyle.
“We don’t know if that [10% figure] will be what we will see in Austin. If we did see that, that would be more than 2,000 people,” he said. “But you also could think that since we’re a hub, and one of the reasons Elon Musk gave was to reduce redundancies around the world, that maybe he would not cut as deeply in Austin.”
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Sechler said the Austin Business Journal has heard from over a dozen employees that have been laid off in Central Texas. Company-wide, the layoffs appear to be taking place across divisions and departments.
“Just from seeing the people who announced basically on social media that they had been laid off, they seemed to run the gamut of positions,” he said said. “We had people in software development, people in engineering. We had people in business development say they had been laid off.
“And that’s obviously not just in Austin. We saw people posting on social media they’ve been laid off in California, in Nevada. So these are widespread layoffs, and they don’t appear at this point to be targeted at one area of the company.”
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Musk said Tesla has grown so fast that it needed to cut redundancies. However, Sechler said there are also likely industry-wide factors at play.
“Sales of electric vehicles have been slowing. They have been slowing from a very rapid pace over the past few years. There have also been price cuts in the industry,” he said. “Tesla’s just recently reported their first-quarter deliveries. They were down year-over-year; they declined for the first time in about four years.
“Their margins are under pressure. They also are under pressure to come out with new models. So, I mean, there are clearly some struggles in the industry that Tesla is having to deal with.”
That being said, Sechler said the EV market isn’t going anywhere.
“Tesla is a leader in EV sales, and obviously it’s a sign that EV sales are slowing,” he said. “I think we have to put it in context that this was a very-fast growing segment of the car industry, and I believe it is still growing overall; it’s just not growing as fast. So that’s a big difference. It’s not that no one’s buying EVs or something. I still think people are buying EVs. And I think that will continue.”
