Tesla's Headcount Reduced by Over 14% in 2023 Amid Stock Options Review

In response to recent challenges, Tesla has made the decision to undergo a significant reduction in its global workforce, resulting in a headcount of just over 121,000 people, including temporary employees. This reduction amounts to more than 14% of its workforce within the first half of 2023.

Elon Musk’s Email and Stock Options Grants

On June 17, Tesla CEO Elon Musk sent an email to all employees, announcing a comprehensive review to provide stock options grants for exceptional performance. He emphasized that these grants would also be awarded to individuals who excel in their contributions to the company. This decision to reinstitute options grants follows a pause in performance-based equity awards. The news was initially reported by Reuters.

Layoffs and Company Reorganization

Tesla's layoffs were initiated when Musk communicated to the entire company via email that over 10% of the staff would be cut. Subsequently, reports indicated Musk's goal of a 20% reduction, potentially even larger. During the company’s first-quarter earnings call, Musk highlighted a significant level of inefficiency, estimated at 25% to 30%, prompting the need to reorganize the company for the next phase of growth.

Reduction in Headcount and Supercharging Team

As of the end of 2023, Tesla's worldwide employee headcount stood at 140,473, encompassing salaried and hourly workers. However, the "everybody" email list, which also includes temporary employees, revealed a reduction to just over 121,000, indicating a decrease of at least 14% since the end of 2023. Additionally, Tesla previously dismantled its Supercharging team, leading to the departure of hundreds of employees, including the team's leader, Rebecca Tinucci, before subsequently rehiring some of them.

Challenges in Sales and Market Competition

Tesla has faced challenges in sales amidst an aging electric vehicle lineup and heightened competition in China, alongside brand deterioration attributed, in part, to Elon Musk’s public behavior. The company reported a significant 9% drop in annual revenue for the first quarter, representing the largest decline since 2012. Furthermore, overall electric vehicle sales growth has slowed, particularly impacting Tesla, despite the previous success of its Model Y as the top-selling car worldwide in 2023.

Future Plans and Investor Promises

Musk has pledged to release a new “Master Plan,” marking the fourth of its kind, and has announced the forthcoming revelation of Tesla's design for a “dedicated robotaxi” on Aug. 8. Additionally, a production and deliveries report for the second quarter is expected during the first week of July, which will provide further insight into the company’s performance. Notably, Tesla's shares have exhibited a 27% decline in the current year, in contrast to the Nasdaq's 18% increase.