Tesla To Cut 285 Jobs At Buffalo Plants; Musk Apologizes For 'incorrectly Low' Severance Packages

(RTTNews) - Electric vehicle maker Tesla Inc. revealed that it will lay off 285 workers from its Buffalo, New York workforce. The planned job cuts represent 14 percent of the total workforce of 2,032 workers in the region. The job cuts are part of the massive layoffs the company recently announced.

In a related development, reports said citing an internal email sent to employees, that Tesla Chief Executive Officer Elon Musk admitted and apologized that some of the severance packages offered to former employees were too low.

On Nasdaq Stock Exchange, Tesla shares were losing around 3 percent to trade at $150.87.

Musk said, "As we reorganize Tesla it has come to my attention that some severance packages are incorrectly low. My apologies for this mistake. It is being corrected immediately."

Earlier this week, the carmaker had announced that it was cutting more than 10% of its global workforce amid the slowdown in EV demand. The proposed job cuts at the world's largest EV maker is likely to impact around 14,000 staff from the global employee strength of around 140,000 in early 2024.

In a memo, Musk then stated that duplication of roles as well as the need for cost reductions are the reasons behind the decision. According to him, the planned job cut would enable Tesla to be lean, innovative, and hungry for the next growth phase cycle.

For the retaining employees, he said, "We are developing some of the most revolutionary technologies in auto, energy and artificial intelligence. As we prepare the company for the next phase of growth, your resolve will make a huge difference in getting us there."

The carmaker has been struggling of late amid weak demand and tough competition in the U.S. and Europe, as well as in its major market of China.

Early this month, Tesla had reported weak production and deliveries in its first quarter, partially due to the early phase of the production ramp of the updated Model 3 at Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin.

In late March, Bloomberg reported that Tesla has cut down its electric vehicle production at its Giga Shanghai factory in China due to sluggish growth in the sales of new-energy vehicles, tough competition and price war. Tesla had also limited manufacturing of EV parts.

Meanwhile, Tesla, in a proxy filing, asked shareholders to approve a CEO pay package for Musk that's equivalent to the compensation plan the company previously granted him in 2018.

In late January, Delaware chancery court judge Chancellor Kathaleen McCormick had voided Musk's earlier $56 billion Tesla compensation package, calling it an "unfathomable sum" that was unfair to shareholders., reports said. The judge ruled then that the Tesla CEO cannot keep pay package worth more than $55 billion.