Elon Musk's Tesla to lay off over 6,000 employees in Texas, California: Report

Elon Musk-led EV giant Tesla is set to cut over 6,000 jobs across Texas and California, according to media reports.

The report follows the resignation of two senior executives and is part of a broader effort to reduce costs amid declining profits and increasing competition in the EV market. The layoffs are planned to start on June 14, with the company expected to lay off 2,688 employees in Austin, Texas, and 3,332 in various locations across California.

Impact on Tesla's workforce

The job cuts represent a significant reduction of more than 10% of Tesla's global workforce, which stood at approximately 140,000 employees.

The layoffs in Texas will affect about 12% of Tesla's workforce in the greater Austin area, where the company's gigafactory and headquarters are situated. Additionally, the layoffs include 285 positions at Tesla’s Buffalo, New York facility, which handles labelling for Tesla’s Autopilot driver assistance software.

Drop in financial performance 

Tesla's decision to downsize comes in the wake of a challenging financial quarter. The company reported a net profit of $1.13 billion for the first quarter of 2024, marking a drop of over 50% from the previous year. Revenue also fell by 9% year-over-year to $21.3 billion.

The decline is attributed largely to decreased sales, exacerbated by a competitive EV market and inflationary pressures.

Strategic shifts and market pressures

The layoffs are part of Tesla's strategy to address slowing demand and falling margins in the EV sector. High interest rates and the introduction of more affordable models by competitors, particularly in China, have impacted Tesla's market position.

Additionally, the company has been slow to refresh its ageing vehicle lineup, which has further dampened consumer interest. Notably, Tesla also cancelled plans for a much-anticipated, cost-effective $25,000 car, which was expected to drive mass-market growth.