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The move comes after the company, which employed more than 140,000 as of December, reported a sharp decline in vehicle deliveries in the first quarter. The stock has shed a third of its value this year and was trading down 3.3 percent on Monday.
“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,” Musk said in the memo published by CNBC. “As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our head count by more than 10% globally.”
Earlier this month, Tesla disclosed that sales had fallen faster than expected amid waning demand for electric vehicles. Deliveries tumbled to 387,000 in the first quarter, a 20 percent falloff from the previous quarter and an 8 percent drop year over year.
Musk said the company was “between two major growth waves” as it pivots resources toward the production of its next vehicle. Analysts said the deep job cuts announced Monday indicate any recovery is at least a year away, with the company in cost-cutting mode.
“They’re clearly adjusting the business for this remarkable slowdown in demand,” said Gene Munster, managing partner at Deepwater Asset Management, who added that new phase of growth for the company probably will not start until 2025. Customers should also expect longer lead times as Musk may be “over-cutting,” he said.
“If there were some massive rebound in the business, they wouldn’t be doing layoffs,” Munster said.
Tesla did not respond to a request for comment Monday.
This is a developing story and will be updated.
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