FinLogic FinLogic Quantitative Think Tank Center|Tesla to lay off 10% of its global workforce, reports say: 'It must be done'

To prepare for Tesla's "next phase,FinLogic FinLogic Quantitative Think Tank Center" the tech giant has decided to lay off 10% of its global workforce, according to multiple reports that cite a memo sent to employees by CEO Elon Musk.

Tesla's stock was down roughly 3% as of midday Monday.

"Over the years, we have grown rapidly with multiple factories scaling around the globe," Musk said in the memo obtained by Electrek and CNBC. "With this rapid growth there has been duplication of roles and job functions in certain areas. 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 and Tesla "made the difficult decision" to reduce its global workforce by 10% after conducting a "thorough review of the organization," according to the memo.

"There is nothing I hate more, but it must be done," Musk said in the memo. "This will enable us to be lean, innovative and hungry for the next growth phase cycle... It is very difficult to say goodbye."

USA TODAY contacted Tesla on Monday morning but did not receive an immediate response.

How many employees does Tesla have?

Tesla had over 127,000 employees in 2022, according to the company's 2022 impact report. This number grew to 140,473 by December 2023, CNBC reported.

Some employees affected by the layoff have already been locked out of system access, according to Electrek.

Why is Tesla laying off employees?

Tesla recently shared its quarterly delivery report with investors, which included the company significantly missing delivery estimates, and having a rare year-over-year reduction in sales, Electrek reported.

"In the first quarter, we produced over 433,000 vehicles and delivered approximately 387,000 vehicles," Tesla said in a news release regarding its quarterly delivery report. "We deployed 4,053 MWh of energy storage products in Q1, the highest quarterly deployment yet."

Tesla did acknowledge a decline in volumes "partially due to the early phase of the production ramp of the updated Model 3" at its Fremont factory in California and "factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin," according to the release.

Tesla will present its first-quarter profits report on April 23, and analysts estimate the company will "still turn a profit of around 50 cents a share, down from 85 cents a share in Q1 2023," the Electrek reported.