Tesla's global job cuts to hit China's sales team: Report

Auto major Tesla's global job cuts will be hitting China, which is its biggest market after the United States, which will mainly affect the sales team, Reuters reported quoting two sources. On Monday, CEO Elon Musk wrote to his staff that the company is laying off more than 10% of its global workforce, as it is grappling with falling sales and an intensifying price war for electric vehicles. A ten per cent reduction in the workforce would be equivalent to at least 14,000 roles. 

The two sources said some staff in Tesla's China sales team were being notified, with one saying more than 10% were losing their jobs. The second source said other teams were also impacted.

The cuts come as Tesla is facing increasing competition in China, the world's largest auto market, where it has been locked in a fierce price war with rivals led by BYD that have been rolling out new models at speed.

The global cuts are a sign of cost pressures as Tesla invests in new models and artificial intelligence, analysts at Gartner and Hargreaves Lansdown said on Monday.

On Monday, Musk wrote that Tesla had grown rapidly in recent years and as a result there had been duplication of roles and job functions in certain areas.

"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, which was seen by news agency Reuters. 

The move follows a difficult start to the year for the electric carmaker. Tesla said it had made approximately 387,000 deliveries to customers in the first quarter of 2024, missing market expectations by about 13%. It was its first fall in deliveries in nearly four years. Tesla recorded a gross profit margin of 17.6% in the fourth quarter, its lowest in more than four years.

The last job cuts were announced in 2022. Musk at that time said he had a "super bad feeling" about the economy. Still, Tesla headcount has risen from around 100,000 in late 2021 to over 140,000 in late 2023, according to filings with US regulators.

The carmaker has manufacturing sites in California, Nevada, New York and Texas in the US as well as plants in Germany and China.

Elon Musk in India

Elon Musk is anticipated to visit India later this month, where he is likely to engage in discussions with Prime Minister Narendra Modi regarding prospective investments. Among these discussions, significant emphasis will be placed on establishing electric vehicle manufacturing facilities within the country. During his visit,  Musk is also expected to unveil major announcements linked to Tesla's strategic plans in India. The company projects an investment of $2-3 billion in initiating manufacturing operations for electric vehicles across the region.

Recent changes in import duty regulations in India could further push Tesla’s initial focus on importing premium electric models while also planning local production. 

Union minister Piyush Goyal on Monday said that Elon Musk recognises India's competitive manufacturing costs as well as talent pool as the billionaire sees the country as not only as a lucrative market but also a strategic base for serving global markets.

The minister reflected on Tesla's success in China and highlighted how the company played a major role in catalyzing the growth of the electric mobility ecosystem in the country.