Tesla in Transition Amidst Layoffs, Exec Exits

Tesla announced layoffs of 10% of its workforce on April 15, affecting about 14,000 workers in the US, China and Europe. CEO Elon Musk’s memo to the company blamed “hiring inefficiencies due to rapid growth.”

The move comes less than two weeks after the company released disappointing Q1 2024 sales numbers and a short week before the company’s Q1 earnings call.

The same day, two important Tesla executives announced that they were leaving the company.

VP of Public Policy and Business Development Rohan Patel had been with the company since 2016; he’d previously been an advisor to President Obama on energy and climate issues.

“The past 8 years at Tesla have been filled with every emotion—but the feeling I have today is utmost gratitude,” Patel wrote on Twitter/X. “My plans are to be a recess monitor for my 2nd grade daughter, practice my violin, go to a bunch of bucket list sporting events and take my very patient wife on some long intended travel.”

4680 battery cell champion resigns

More surprisingly, Senior VP of Powertrain and Energy Drew Baglino also announced he was leaving. Baglino was in charge of the company’s move to 4680 battery cell production, cathode production, and other battery and powertrain related projects. Baglino had been with Tesla for 18 years and directly reported to Musk.

Patel and Baglino follow the path out the door taken by former CFO Zachary Kirkhorn, who resigned last August.

Changing priorities

These executive departures follow news first reported by Reuters that, in the face of too-tough competition from China EV makers, Tesla had scrapped plans to build an entry-level, lower-cost EV at the Texas gigafactory. Instead, those resources are to go to the company’s Robotaxi project and a related new data center to be at the factory.

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Often, announcements of company-wide layoffs spur a positive response from the stock market. CNBC notes that when Tesla laid off 9% of its workforce in 2018, its stock price rose 3%.

Not this time: Tesla shares dropped 6% following this week’s news.

Wedbush Securities’s Dan Ives posted on X that the loss of Baglino in particular was a “gut punch” for the company.

Tesla’s Q1 earnings call is on April 23: It promises to be feisty as investors try to pin Elon Musk down on whether the company is evolving—or simply flailing.