Tesla ramps up job cuts in China as sales slowdown bites

Tesla Inc.’s job cuts are escalating in China, according to people familiar with the matter, as Elon Musk contends with growing pressure to win back share in the world’s biggest auto market.

Additional layoffs began earlier this week, extending cuts in mid-April that were part of the electric vehicle maker’s pledge to slash global headcount by more than 10 per cent, said the people, who asked not to be identified as they’re not authorized to disclose the information publicly.

The latest move affects a range of departments including customer service staff, engineers, production line workers, and the logistics team at Tesla’s Shanghai plant — home to more than half the company’s global production, according to the people. The layoffs last month more directly impacted sales representatives, they said.

It’s unclear how many people will be affected and what impact it may have on Tesla’s China operations. The company’s China-based representatives did not immediately respond to requests for comments.

A global slowdown in EV demand has sparked Tesla’s biggest layoffs ever. But the hit has been particularly acute in China, where intense competition from rivals like BYD Co. and weak consumer sentiment is hurting sales. Shipments from its Shanghai factory dropped 18 per cent in April even as the overall market for new-energy vehicles grew 33 per cent.

Tesla’s China market share shrank to about 7.5 per cent in the first quarter of 2024, from 10.5 per cent in the same period last year, according to Bloomberg News calculations.

China Overhaul

In addition to the ongoing cuts, Tesla’s China business will see the return of Tom Zhu, who previously headed the carmaker’s Asia Pacific operations and led its entry into China, Bloomberg News reported Wednesday. Zhu had been promoted to senior vice president of automotive in April 2023, a role in which he oversaw global production, sales, deliveries, service and the company’s factories from Tesla’s Austin headquarters.

The layoffs come despite Tesla winning in-principle approval from government officials to deploy its driver-assistance system China, which will be an immediate revenue boost. It was granted the approval under certain conditions and managed to clear two important hurdles: reaching a mapping and navigation deal with Chinese tech giant Baidu Inc., and meeting requirements for how it handles data-security and privacy issues.

Most of the laid off employees in China will receive a payout equivalent to one month’s pay for every year worked, plus an additional three months’ salary, according to one of the people. Some staff were escorted out of their workplaces by managers and some left in groups via shuttle bus, one of the people said.

Globally, a growing number of executives have left Tesla, most of the company’s 500-person Supercharger team and its newly formed marketing team have been axed, and the automaker is rescinding offers just weeks before internships were set to start.