Tesla announced that it will lay off more than 10% of its workforce, highlighting the company's efforts to cope with declining sales and a price war for electric vehicles.

"Approximately every five years, we need to reorganize and simplify our organizational structure to adapt to the next stage of growth," CEO Elon Musk posted on social platform X. Drew Baglino, head of battery development, and Rohan Patel, vice president of public policy also announced their resignation.

The last time Musk announced layoffs was in 2022, when he told executives that his feeling about the economy was "very bad.". According to regulatory documents in the United States, the number of employees at Tesla has increased from over 100,000 at the end of 2021 to over 140,000 by the end of 2023.

Bagrino is a senior employee of Tesla and one of the four members of the company's executive team.

Rex Shares CEO Scott Acheychek stated that Tesla's layoffs are strategic. But Michael Ashley Schulman, Chief Investment Officer of Running Point Capital Advisors, believes that the departure of senior management is a "bigger negative signal today," indicating that Tesla's growth is in trouble.

Less than a year ago, Tesla's CFO Zach Kirkhorn resigned, sparking questions about succession planning.

On Monday, Tesla's stock price fell 5.6% to $161.48. Electric vehicle stocks have generally declined. Rivian, Lucid, and VinFast's stock prices have also fallen by between 2% and 9%.

"It is crucial to examine every part of the organization to save costs and improve efficiency as we prepare for the next stage of company expansion," Musk said in a memo distributed to all employees.

On April 5th, it was reported that Tesla had cancelled a low-priced car (known as the Model 2) that had high expectations. The expected selling price of Model 2 is $25,000, and investors have been hoping that it can drive expansion in the mass market. Musk had previously stated that the Model 2 would be put into production by the end of 2025.

Shortly after the news was released, Musk stated on his social media website X that the media was lying, but did not mention any inaccuracies.

After Tesla announced layoffs on Monday, there were media reports that the funding for the Model 2 had been cancelled, and many of the employees involved had been laid off.

Tesla's stock has fallen nearly 33% this year, lagging behind traditional automakers such as Toyota and General Motors, whose stock prices have risen by 45% and 20% respectively.

Analysts from Gartner and Hargreaves Lansdown said that the layoffs indicate that while Tesla is investing in new models and artificial intelligence, cost pressures still exist.

This month, Tesla stated that global vehicle deliveries have declined for the first time in over four years as price reductions have failed to stimulate demand.

Due to high borrowing rates reducing consumer demand for expensive goods, and in China, the world's largest automotive market, competitors are launching lower priced models, Tesla has not yet launched new models.

In the fourth quarter, China's BYD once surpassed the United States to become the world's largest electric vehicle manufacturer, and the new company Xiaomi also received a lot of attention.

Tesla is preparing to launch sales in India, the world's third-largest automotive market. Tesla plans to export cars produced by German factories to India this year. The company is also evaluating the location of exhibition halls and service centers in major cities in India.