Tesla CEO Elon Musk is reducing Tesla’s global workforce by 10 per cent, potentially affecting around 14,000 employees worldwide as part of a significant reorganisation and cost-cutting effort.

The layoffs follow Tesla’s recent report of its first year-over-year decline in vehicle deliveries since 2020. In an internal email obtained by Electrek, Musk explained that the restructuring aims to “streamline the company for the next phase of growth.”

Tesla’s job cuts have vastly impacted China, its second-largest market as per report.

According to the same report, the job cuts in China are affecting teams including sales, with more than 10 per cent of the China sales team expected to lose their jobs. Other teams are also reportedly impacted by the layoffs.

Tesla’s operations in China, which include its largest plant in Shanghai and its head office in Beijing, are facing challenges amid a fierce price war with competitors like BYD in the country’s competitive auto market.

Analysts believe that these job cuts are a result of Tesla’s efforts to manage costs while investing in new models and artificial intelligence.

Musk expressed his reluctance towards these actions, stating, “There is nothing I hate more, but it must be done.” He highlighted that Tesla’s rapid expansion across multiple factories worldwide has led to redundant roles that need to be addressed.

On X, Musk further explained that Tesla typically undergoes a major reorganisation every five years to prepare for its next growth cycle. This current restructuring is aimed at making Tesla more efficient as it prepares to launch its next-generation vehicles.

The company recently reported a decline in global vehicle deliveries for the first time in nearly four years, highlighting the need for strategic adjustments in its operations.

Amidst these changes, there are rumors that Musk may announce plans to invest in a new Tesla factory in India during an upcoming meeting with PM Modi later this month.