Tesla is escalating the scale of layoffs in China, with more cuts starting earlier this week, extending mid-April cuts, according to Bloomberg.

(Image credit: CnEVPost)

Tesla (NASDAQ: TSLA) is escalating the scale of layoffs in China, with more cuts starting earlier this week, extending mid-April cuts, Bloomberg said in a report today, citing people familiar with the matter.

The latest move affects a range of departments at Tesla's Shanghai factory, including customer service staff, engineers, production line workers and the logistics team, according to the report.

Tesla's layoffs last month had a more immediate impact on sales representatives, the report said, citing people familiar with the matter.

It's unclear how many people will be affected and how that might impact Tesla's operations in China, the report noted.

Most of the laid-off employees in China will be compensated the equivalent of one month's salary for each year of service, plus three months' pay, a person familiar with the matter said.

Some employees were escorted out of the workplace by managers, while some left in groups via shuttle bus, according to Bloomberg.

In addition to the ongoing layoffs, Tesla's China operations will see the return of Tom Zhu, who headed the EV maker's Asia-Pacific operations and led Tesla's entry into China, Bloomberg reported Wednesday.

Zhu was promoted to senior vice president of automotive in April 2023, overseeing global production, sales, delivery, service and the company's factory at Tesla's Austin headquarters.

Tesla CEO Elon Musk told employees in an internal memo in the middle of last month that the company would lay off more than 10 percent of its global workforce in response to declining sales and an intensifying EV price war.

"This will enable us to be lean, innovative and hungry for the next growth phase cycle," Musk said in that memo.

As of December 31, 2023, Tesla had 140,473 employees worldwide, according to one of the company's SEC filings. The company employs about 20,000 people in China.

Tesla's global layoff plan affects team employees in China, including sales, Reuters said in an April 16 report, citing two people familiar with the matter.

Tesla has a factory in Shanghai that produces the Model 3 sedan and Model Y crossover. The plant delivers vehicles to local consumers as well as being an export hub for Tesla.

In China, Tesla models remain among the most popular, especially the Model Y.

But the US EV maker is also facing a growing number of tough rivals, a situation exacerbated by low consumer sentiment.

Earlier today, Nio (NYSE: NIO) said it will officially launch its sub-brand Onvo (Ledao in China) on May 15, with its first model, the Onvo L60, competing with Tesla's (NASDAQ: TSLA) Model Y.

Tesla China sold 62,167 vehicles in April, down 18.03 percent from 75,842 in the same month last year and down 30.20 percent from 89,064 in March, according to data released on May 7 by the China Passenger Car Association (CPCA).

The monthly sales figure includes those exported from China to overseas markets, while the local sales figure is not yet available.

In March, the EV maker sold 89,064 China-made vehicles, including 26,666 exported and 62,398 sold in China.

Tesla's share of China's new energy vehicle (NEV) market, which includes plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs), stood at 8.8 percent in March, up from 7.77 percent in February, but down from 14.12 percent in the same month last year CnEVPost's calculations show.

In China's BEV market, Tesla's share was 14.58 percent in March, up from 13.64 percent in February, but down from 20.02 percent a year earlier.

Nio's William Li asks potential Tesla Model Y buyers to wait for Alps' 1st model