As Tesla’s sales slow down, the American electric car giant has ramped up its layoffs in China, affecting multiple departments from production to customer service.
According to sources cited by Bloomberg on Thursday (May 9), Tesla is expanding its layoff efforts in China.
Sources stated that further layoffs began earlier this week, following a previous round of layoffs in mid-April. This is part of Tesla’s commitment to reduce its global workforce by more than 10%. The sources, who requested anonymity as they were not authorized to disclose the information, mentioned that this round of layoffs impacted various departments at Tesla’s Shanghai factory, including customer service staff, engineers, production line workers, and logistics teams. The Shanghai factory accounts for over half of Tesla’s global production. The April layoffs primarily targeted sales representatives.
One source mentioned that most of the employees being laid off in China will receive compensation based on the formula N+3, where for every N years of service, they will receive N months of salary plus an additional 3 months of salary. Some employees were escorted out of the workplace by management, while others left collectively by bus.
It is currently unclear how many individuals will be affected by the layoffs and what impact this may have on Tesla’s business in China. Representatives from Tesla in China did not immediately respond to requests for comment.
With global demand for electric vehicles slowing down, Tesla has initiated its largest layoff in its history. In China, however, the layoffs seem particularly significant as local electric car manufacturers like BYD are fiercely competing with Tesla at lower prices, while weak consumer confidence in China is affecting sales.
In April, the shipment volume at Tesla’s Shanghai factory declined by 18%.
According to Bloomberg’s estimates, Tesla’s market share in China dropped from around 10.5% in the first quarter of 2023 to about 7.5% in the same period of 2024.
Bloomberg reported on Wednesday that Tom Zhu, commonly referred to as “Tesla’s second-in-command,” will be returning to China to resume his role as Vice President of Tesla’s China operations.
Zhu was promoted to Senior Vice President of Tesla in April 2023 and was overseeing global production, sales, delivery, service, and company factories at the company’s headquarters in Austin, USA. However, several sources revealed that in recent months, Elon Musk has taken over the North American sales business from Zhu.
The sources further disclosed that Zhu will step down from his role in Tesla’s North American operations. Multiple Chinese media outlets reported that Zhu will be returning to China to oversee Tesla’s operations in the country.