TMTPost --Tesla Inc.’s upcoming massive layoffs seem to affect its jobs in China.

Credit：Tesla

Multiple media outlet reported Tesla is planning to cut its worldwide headcount by more than 10%, the largest ever layoffs in its two-decade history. As of end of 2023, Tesla’s global workforce has risen from around 100,000 in late 2021 to 140,473, according to fillings with U.S. regulators. Based on the reported layoff scale, Tesla will reduce about 14,000 of jobs. The layoffs could affect workers not just in Tesla’s home market the United States, but also in another major market China, across sales, tech and engineering. It was reported that Tesla China has asked executives identify positions that are critical to their team these months and some of them were asked to rank team members based on performance. Reuters’ sources said members of Tesla China sales team were being notified to be sacked and one said more than 10% were losing their jobs. Gigafactory Shanghai was said to be laid off several dozen people, only a small proportion of staff.  

“As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” CEO Elon Musk told employees in a memo seen by media outlets including CNBC. Musk stressed how hard the layoff decision Tesla made to facilitate the future growth. “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,” Musk said in the memo.

Earlier this week, two Tesla executives announced on the social media  X that they are leaving the company. “I made the difficult decision to move on from Tesla after 18 years yesterday,” Andrew Baglino, the senior vice president of powertrain and energy engineering, said in a statement Monday. “I am so thankful to have worked with and learned from the countless incredibly talented people at Tesla over the years.” Baglino was one of four members, along with Musk, of the leadership team listed on the company's investor relations website. Rohan Patel, senior global director of public policy and business development, also left after eight year with the company. “The past 8 years at Tesla have been filled with every emotion—but the feeling I have today is utmost gratitude,” Patel wrote Monday.

Some of Tesla departments were said to be gutted by 20% and even hit high performers, which were largely due to poor financial performance, TechCrunch learned. Tesla’s profit was severely dented by major price cuts and the gap of gross margin margin between its arch-rival BYD Co. Ltd. kept widening last year. For the year 2023, BYD’s gross profit margin of vehicles popped 2.63 percentage points year-over-year (YoY) to 23.02%, beating Tesla’s annual margin of 18.2%. In the fourth quarter, BYD once again topped Tesla with vehicle margin of 25.1%, better than the analysts’ estimated 24.5%, while Tesla’s margin of 17.6% down to the lowest in four years, falling short of the projection of 18.3%.This is the third straight quarter that Tesla was overtaken by BYD in terms of margin. Tesla warned investor at the earnings call following the fourth quarter results that the sales growth this year could be notably lower.

 The latest layoff suggested the great pressure Tesla has been facing from heightened competition and price war , especially in China, the largest EV market across the world as well the most competitive one. Nine auto companies including Tesla announced new promotional policies or price cuts on March 1. Later that month, Bloomberg cited sources that Tesla has instructed employees at Gigafactory Shanghai to cut production of both the Model 3 and Model Y by working five days a week, rather than the usual six and a half days. According to the sources, output of Shanghai factory has been trimmed since the instruction was made in March, and local employees have not received clear indication of when the plant will go back to full capacity.