Tesla is laying off 10% of its employees worldwide due to declining sales.

According to reports, Tesla will lay off approximately 10% of its employees worldwide in the coming months.

The decision will affect 14,000 employees of the company, and comes against the backdrop of declining sales, revenues, and a generally concerning state of the industry.

Tesla has recently faced intense price wars from Chinese companies, in addition to a decrease in demand for electric vehicles.

Elon Musk, the CEO of Tesla, recently sent an email to employees informing them of his intention to conduct layoffs affecting more than 10% of the company's workforce. While the exact number of employees to be let go is currently unknown, some news reports have indicated that around 14,000 employees will be affected by this decision. These developments come as a stunning surprise, coinciding with Musk's announcement of plans to increase salaries for Tesla engineers, so they aren't tempted to work for OpenAI, which offers higher salaries.

The email confirmed that the planned layoffs will help Tesla reduce costs and increase productivity. Musk also indicated that the decision is tough, but it's important to prepare for the next growth phase. Internal sources from the company have already reported that some employees have lost access to their email messages and Teams accounts since yesterday, Monday.

Tesla's first-quarter sales figures revealed a significant decline, falling below Wall Street analysts' estimates and experiencing a 20% decrease from the previous quarter. This marks the company's first year-over-year sales decline since 2020.

Tesla attributed the decline to production issues with the Model 3, deliberate arson attacks at its factory near Berlin, and supply chain problems resulting from the Red Sea conflict. However, analysts suggest that the company produced more cars than it actually sold, indicating that the primary issue is a decrease in demand rather than production weakness.

Rumors of workforce layoffs have been spreading like wildfire in recent months. Bloomberg reported in February that the electric car manufacturer had urged managers to start identifying the most vital tasks and roles for the company. During that time, Tesla also conducted performance reviews for some employees, while scheduling others for a later time. This comes after Tesla reported hiring over 140,000 workers worldwide, including more than 20,000 at the Fremont factory in California.

Elon Musk has a history of reducing staff numbers to cut costs. The American billionaire halved Twitter's workforce in one fell swoop after acquiring the company in 2022, only to hastily lay off more employees afterward, some of whom were rehired later.

Last year, Tesla laid off dozens of employees working on its self-driving service at one of its sites in Buffalo, New York, citing poor performance as the sole reason for the workforce reduction, unrelated to any cost-cutting factors.

Numerous reports also indicate that Tesla has significantly slowed down its pace of hiring new workers since last year. Musk informed employees last May that he must personally approve all new hires at the company.

Things don't seem to be going smoothly within Tesla's corridors, facing increasing competition from Chinese electric car manufacturers, despite the company lowering its car prices and conducting promotional campaigns for the first time in its history in hopes of improving the situation.

It's worth noting that Musk has warned that Tesla may face production hurdles next year as the company tries to increase production of the Cybertruck and anticipated next-generation vehicles to keep up with other manufacturers.