Tesla has reduced its workforce by approximately 1,700 employees at its Gigafactory near Berlin, highlighting the weak demand for electric vehicles in the European market and the company's ongoing strategic adjustments to control costs. This move is the latest manifestation of the electric vehicle manufacturer's global cost-cutting initiative.
Citing internal documents, a report from the German newspaper Handelsblatt on the 22nd indicated that the factory in Grünheide currently employs 10,703 workers, a decrease of about 14% compared to the headcount disclosed prior to the 2024 union elections. This facility is Tesla's sole production base in Europe.
This round of job cuts is an extension of CEO Elon Musk's global workforce reduction plan announced in April 2024, which aimed to boost efficiency by slashing more than 10% of employees. In fact, Musk had established a management principle as early as May 2018 to eliminate the bottom 10% of performers each quarter.
The layoffs also align with a broader trend observed in early 2026. Manufacturers and technology companies are continuously streamlining their operations to cope with slowing demand growth, a tightening financing environment, and pressure to protect profit margins after years of aggressive expansion.
In 2025, Tesla shifted its strategic focus from rapid expansion to business consolidation. Management has prioritized cost control, factory efficiency, and cash preservation, as aggressive price cuts and tepid demand have compressed the profit margins of its automotive business.
This strategic pivot is occurring against a backdrop of significantly slowing growth in the European electric vehicle market. After several years of rapid expansion, manufacturers now face a more intensely competitive environment and more cautious consumer spending.
Despite the loss of momentum in its traditional automotive business, Tesla's stock price has shown relative resilience. Investors are increasingly focusing on the company's long-term ambitions in robotaxi services, autonomous driving software, and artificial intelligence, viewing these areas as potential high-margin growth engines.
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