Tesla, the renowned electric vehicle manufacturer spearheaded by CEO Elon Musk, is reportedly slashing approximately 15,000 jobs globally.

The company has yet to officially comment on this development, which is purportedly part of a strategic initiative to prepare Tesla for its forthcoming growth cycle.

The news, broken by Electrek earlier today, has sent ripples across the automotive industry. According to the tech publication, the decision was communicated via an internal memo, corroborated by Reuters.

Managers within the company were reportedly tasked earlier this year with identifying personnel for the cuts.

What has caused these redundancies?

This move comes amid a backdrop of challenges for Tesla, including softer demand for its electric vehicles. Despite multiple price reductions aimed at enticing buyers, the company has faced formidable competition, particularly from Chinese markets. Additionally, financial pressures stemming from the cost of living crisis and rising interest rates have further compounded Tesla’s struggles.

Notably, Tesla’s recent quarterly report marked a downturn in vehicle deliveries, its first in nearly four years, underscoring the urgency for strategic measures to mitigate financial strain.

A cost-saving opportunity

In an email addressed to Tesla employees, Musk emphasised the imperative of scrutinising every facet of the company for cost-saving opportunities and enhancing productivity. “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,” stated Musk.

The decision to downsize the workforce by over 10 percent globally reflects Tesla’s commitment to navigating turbulent economic landscapes while fortifying its position as a leader in the automotive industry.

Tesla is slated to unveil its next quarterly earnings report on April 23rd, providing further insight into the company’s financial trajectory amidst these significant strategic shifts.

What does it mean for HR?

Kate Palmer, Employment Services Director at Peninsula says: “Businesses may propose redundancies for a variety of reasons. They’re not just reserved for organisations that are suffering financially. A redundancy situation may arise, as appears to be the case here when the business seeks to be more profitable in the long run.

“As long as redundancy is the genuine reason for dismissal, a tribunal will not meddle with the organisation’s right to make a business decision. The requirement for employees to do a particular kind of work must, therefore, have ceased or diminished for it to be a redundancy situation.

“If a business is proposing redundancies, they must ensure that they follow a fair procedure. Employees should be consulted when the proposals are still at an early stage. Depending on the numbers involved, collective consultation might be necessary”.

 

 

 

 

Amelia Brand
Amelia Brand

Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.