Tesla told its workers Monday that more than 10 percent of them would lose their jobs, a sign that slowing interest in electric vehicles is causing significant disruption for the world’s leading EV-maker.
The company also parted ways with two top executives: Andrew Baglino, a top lieutenant who developed Tesla’s vehicles and energy products, and Rohan Patel, a vice president of public policy who once served as a climate and energy adviser in the Obama White House.
After two years in which Tesla opened two new factories, one in Texas and another in Berlin, the automaker’s layoffs come amid declining interest in its vehicles and growing competition from other automakers.
“With this rapid growth there has been duplication of roles and job functions in certain areas,” said CEO Elon Musk in a memo to employees that was republished by CNBC. Of the layoffs, Musk continued, “There is nothing I hate more, but it must be done.”
The dimming fortunes of Tesla — whose stock has lost 35 percent of its value since December — demonstrates that the company’s departures from traditional automaking doesn’t mean it can escape traditional economic booms and busts.
‘I don’t want to make this sound too cynical, but it’s an indication that Tesla is a car company,” said Mike Ramsey, an auto analyst at the consulting firm Gartner.
“It has long been considered a technology company, and it for sure has been a leader in innovating technology inside the car, but the fact of the matter is that these layoffs are much more similar to what we see in the rest of the auto industry when you have grown beyond your current demand,” he said.
At the same time, the EV market is braking overall. According to Kelley Blue Book, the compiler of auto data, U.S. EV sales in the first quarter of this year grew 2.6 percent compared to the same quarter the year before. By comparison, in the first quarter of 2023, EV sales were 46 percent higher than the first quarter of 2022.
The lag may be causing at least one charging provider to also reduce payrolls.
Citing anonymous sources, Reuters reported Monday that oil major BP has cut 10 percent of positions at its charging arm, BP Pulse. Reuters said the company isn’t meeting its targets to provide charging solutions to commercial fleets and that it would exit eight countries while retaining its footprint in China, Britain, Germany and the United States.
BP Pulse did not respond to a request for comment.
For Tesla, there is downward pressure on multiple fronts. The pace of EV sales growth has slowed in its three main markets: China, Europe and especially North America.
A long roster of rivals also are finally gnawing away at an EV market that Tesla has always dominated.
In China, a phalanx of domestic automakers are producing inexpensive and appealing EVs. In the West, traditional automakers like Volkswagen, General Motors and Hyundai and new entrants like Rivian are selling growing numbers of EVs and also plug-in hybrids that address many buyers’ EV range anxiety.
“You have the Chinese and Hyundai and some of the other automakers who are not missing a beat here…and coming out with things that people really want,” said Jason Schloetzer, a business professor who studies battery-electric and self-driving cars at Georgetown University.
‘An absolute gut punch’
Tesla has sought to keep its market share by slashing prices. Nonetheless, after several years of steady growth, Tesla’s year-over-year sales in the first quarter of this year declined 8.5 percent.
The most significant executive departure from Tesla is that of Baglino, a vice president in charge of powertrain and energy engineering who played a key role in developing the automaker’s products. He was one of a tiny cohort of titled executives at the company and spoke alongside Musk at public events.
Dan Ives, a Tesla analyst at the investment firm Wedbush Securities, called Baglino’s exit “an absolute gut punch loss” to Tesla, in part because he was reputed to be a leader in Tesla’s development of a next-generation inexpensive EV.
Patel, the other executive to leave, was vice president of public policy and business development.
The circumstances of these executive departures are not clear. On X, formerly known as Twitter, Bagolino said that Sunday he “made the difficult decision to move on.” Both men said on X that they have no immediate work plans, and also on X, Musk praised both men for their work.
The company did not respond to request for comment.
Tesla has lost numerous senior leaders in recent years, most recently Zachary Kirkhorn, the chief financial officer, who like Baglino was one of the few executives other than Musk to speak on behalf of the company. Kirkhorn departed last summer.
Tesla’s stock dropped on Monday to $161, its lowest point in almost a year. The company had 140,473 employees worldwide as of the end of last year, according to a financial filing with the SEC.
