Over 14,000 Tesla employees will soon lose their jobs. Company boss Elon Musk announced this in an internal email on Monday morning. The letter with the subject “Reorg Update” begins with the justification for the restructuring measures.

Musk writes in the email, which is available to the “Handelsblatt” as a screenshot: “Over the years, we have grown quickly and have set up several locations around the globe. This rapid growth resulted in a duplication of roles and tasks in certain areas “As we prepare the company for the next phase of growth, it is critical to review every aspect of the business for cost reductions and productivity improvements.”

It continues: “As part of these efforts, we conducted a thorough review of the organization and made the difficult decision to reduce our global workforce by more than ten percent.” The company most recently reported employing 140,473 people. The number was collected on December 31, 2023, according to the letter to investors.

According to “Handelsblatt”, mass layoffs are also to be expected in Berlin-Grünheide. It is said that around 3,000 of the 12,500 people who work on site will have to leave. This was already known internally, according to the report. In advance, several celebrations in Berlin that would have taken place in the period after the announcement were canceled.

Musk added to his email: “There is nothing I hate more, but it must be done. This will allow us to be lean, innovative and hungry for the next growth cycle.” The market initially reacted cautiously to the news and Tesla shares fell by more than one percent.

Ultimately, the reduction in employees is also tangible evidence that Tesla is weakening more than usual. Years of growth are currently followed by a phase of poor sales and high inventories. In the first quarter, new registrations for the brand fell by 8.5 percent.

It also looks as if Tesla will not be able to free itself from the overall development of subdued demand for electric cars. Germany is not the only country with declining sales figures – and Tesla is just as affected by cheap Chinese imports as German manufacturers. Elon Musk has not only once called for punitive tariffs for cheap competition from the Far East, which, in his opinion, completely disrupts the Western price structure. Somewhat ironically: Tesla also builds a considerable number of its vehicles in China.

In the case of Tesla, however, there are also home-made problems. Firstly, the most recently introduced Cybertruck cannot be manufactured in sufficient quantities and, secondly, it is repeatedly mentioned in connection with serious quality problems. The Tesla software, which is supposed to enable the cars to drive semi-autonomously, is also part of several official investigations in the USA due to frequent accidents.

On top of that, Reuters recently reported that Tesla had internally buried its plans for a cheaper model. In response, Musk accused the agency of lying on X (formerly Twitter).

Regardless of whether this is true, it is currently unclear exactly which model will expand the current product range and when. There is only one new Tesla Roadster in the starting blocks, which is probably planned for the end of 2024, but has already been pushed back several times. Elon Musk also wants to present the Tesla robotaxi on August 8th – further details are pending.

However, a new volume model that inherits the Model 3 or is even priced below the mid-range car is apparently not within reach. In the pure car market, Tesla would not be well equipped to compete with large Chinese companies like BYD.