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04/16/2024 |

Tesla Announces Layoffs: Insights and Implications

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Tesla’s Layoff Announcement

Tesla recently disclosed in an internal email a significant workforce reduction exceeding 10%. This decision, the largest ever layoffs from the automaker, will affect approximately 14,000 employees. In the email, CEO Elon Musk said, “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.”

Executives Say Goodbye

In addition to the layoffs, Tesla executives Drew Baglino (SVP of Powertrain & Energy Engineering) and Rohan Patel (VP for Public Policy and Business Development) announced they will be leaving the company, as well. Baglino had worked with the company since its early years, while Patel joined in 2016 after advising former President Barack Obama.

What The Street Thinks

Despite the narrative from Tesla HQ, analysts had a slightly different take on the news. Notably, JP Morgan analyst Ryan Brinkman said that Tesla’s announcement should “firmly dispel the notion” that the company’s big Q1 delivery miss was somehow supply-driven rather than reflective of a demand problem and that the news “should now leave no double that the decline in deliveries has been a function of lower demand and not supply.” On this belief, they maintain their Underweight rating on Tesla with a $115 price target.