Elon Musk wanted Tesla to slash its headcount by 20% because its quarterly vehicle deliveries fell by that much, Bloomberg source says

• Elon Musk wanted Tesla to reduce its workforce by one-fifth, Bloomberg reported.
• Musk wanted the layoffs to match the drop in quarterly vehicle deliveries.

Tesla CEO Elon Musk at one point wanted the EV giant to trim its workforce by 20%, Bloomberg reported on Sunday, citing a person familiar with the matter.

The reduction, Musk reasoned, should match the reduction in vehicle deliveries between the fourth quarter of 2023 and the first quarter of 2024, per Bloomberg.

Earlier this month, Tesla said it delivered 386,810 cars in the first quarter of 2024, a 20.1% drop from the previous quarter. The delivery drop was the company's lowest quarterly performance since 2022.

Musk had announced a round of mass layoffs at Tesla last week. In his memo to staff, the billionaire said the company is slashing "more than 10%" of its head count.

"Over the years, we have grown rapidly with multiple factories scaling around the globe," Musk wrote. "With this rapid growth, there has been duplication of roles and job functions in certain areas."

Before the layoffs, Tesla said it employed more than 140,000 people globally.

Besides declining sales, the company has grappled with increased competition from Chinese car companies like BYD. Back in January, Musk had told investors in an earnings call that Chinese automakers "are the most competitive car companies in the world."

Tesla's growing troubles have raised questions about Musk's ability to run multiple businesses simultaneously. Besides leading Tesla, Musk also has his hands full with other ventures like SpaceX, The Boring Company, Neuralink, X, and xAI.

But, Musk has maintained that the layoffs were necessary to keep Tesla "lean innovative, and hungry for the next growth phase cycle," per his memo to staff last week.

"There is nothing I hate more, but it must be done," he wrote.

Representatives for Tesla didn't immediately respond to a request for comment from BI sent outside regular business hours.