Tesla (NASDAQ:TSLA) stock is sinking on news that two well-known Tesla executives will leave the company as the electric vehicle (EV) maker deals with the backlash from widespread layoffs. Indeed, TSLA is down more than 5% in the afternoon, adding to the company’s already-deep losses this year.
In a memo released this morning, Tesla announced it would lay off more than 10% of its global workforce, which consisted of roughly 140,500 people at the end of 2023.
“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,” Musk said in the memo obtained by CNBC. “As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally,” the memo said.
Along with the layoffs, Tesla executives Drew Baglino and Rohan Patel are reported to have left the company. Bagalino was Tesla’s senior vice president of Powertrain and Energy, while Patel was the VP of Public Policy and Business.
“Good for me and hopefully also good for Tesla,” Patel told TechCrunch. “Had an amazing run and accomplished way more than I could’ve ever imagined, as a result of working with the best policy/bizdev team in the business.”
In an X post, Bagalino stated it was a “difficult decision” to leave Tesla after 18 years at the company.
Tesla Chief Executive Elon Musk replied to departing tweets from both executives on X, thanking them for what they’ve done for Tesla.
TSLA Stock Continues to Stumble Amid Growing Competition, Slowing Sales
Tesla has had a difficult year so far. TSLA stock is down almost 35% year-to-date, having lost more than $240 billion in market capitalization, the most on Wall Street in 2024.
Reasonably so, earlier this month, Tesla announced its first annual decline in vehicle deliveries since the start of the Covid-19 pandemic. Even despite numerous discounts and purchase incentives, fourth-quarter deliveries fell by 8.5% year-over-year, bringing output down 1.7%.
Along with a general slowdown in EV adoption, Tesla faces increased competition. Nearly every major vehicle maker is investing heavily in their own electric vehicle divisions, along with the rapidly growing class of Chinese EV makers.
“There’s a lot of people who are out there who think that the top 10 car companies are going to be Tesla followed by nine Chinese car companies. I think they might not be wrong,” Musk said last November.
It’s unclear what Tesla’s path forward will look like. Investors are eagerly awaiting the company’s Q1 earnings call, due on April 23.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
