Tesla's global job cuts include reducing staff in the United States and China — the automaker's two biggest markets — across sales, tech and engineering, five sources briefed on the matter said.

CEO Elon Musk on April 15 told staff in an internal memo seen by Reuters that the company is laying off more than 10 percent of its global workforce, as it grapples with falling sales and an intensifying price war for electric vehicles.

"About every five years, we need to reorganize and streamline the company for the next phase of growth," he commented in a post on X, formerly known as Twitter.

Two senior leaders, battery development chief Drew Baglino and vice-president for public policy Rohan Patel, also announced their departures.

Musk last announced a round of job cuts in 2022, after telling executives he had a "super bad feeling" about the economy. Still, Tesla's head count rose from around 100,000 in late 2021 to more than 140,000 in late 2023, according to filings with US regulators.

Several US-based service centers saw heavy layoffs effective immediately, primarily of sales staff and technicians, one source said. Another location laid off all front-of-house staff, the source said.

A Tesla program manager in California posted a spreadsheet on LinkedIn of more than 140 staff, mostly engineers, who had been laid off and were seeking new jobs.

Two sources said members of Tesla's China sales team were notified they were being made redundant, with one saying more than 10 percent were losing their jobs.

A third source said that in Shanghai, where Tesla's largest plant is located, the company will only lay off a small proportion of staff, amounting to "several dozen" people.

"The sweeping layoffs ... should now leave no doubt that the decline in deliveries has been a function of lower demand and not supply," analysts at J.P. Morgan said, adding that it "has far-reaching implications for the hypergrowth narrative still embedded in Tesla's share price".

Tesla's US headquarters and its China unit did not immediately respond to requests for comment. All the sources declined to be named as they were not permitted to speak to the media.

The Shanghai and Beijing local governments did not immediately respond to requests for comment.

Tesla Germany denied reports in German media that 3,000 of the carmaker's roughly 12,000 staff had been fired, and said it was evaluating how to implement Musk's orders at the plant.

"We will pursue the measure for Gigafactory Berlin-Brandenburg against the background of all labor laws and co-determination requirements, bringing in the works council," Tesla Germany said on Tuesday in an email statement to Reuters, adding no workers had been notified yet.

German union IG Metall said on April 15 that Tesla had not informed or consulted the works council, as is customary in Germany, prior to emailing all staff.

While German labor law has strict rules on firing staff, around 1,000 workers at the plant are on temporary contracts, according to a source with knowledge of the matter, leaving them more vulnerable to dismissal.

Tesla faces increasing competition in China in a fierce price war with rivals led by BYD, slowing sales in the US, as well as high investment costs in new models and artificial intelligence.

Global vehicle deliveries in the first quarter fell for the first time in nearly four years, as price cuts failed to stir demand.

REUTERS