Tesla, the world's largest vehicle-maker by market value, is set to lay off more than 10% of its global electric vehicle workforce, according to a memo from CEO Elon Musk. This decision comes as Tesla aims to streamline operations and enhance innovation amidst challenges in the electric vehicle market.

In a significant move aimed at optimizing operations, Tesla, led by CEO Elon Musk, has announced plans to reduce its global workforce by more than 10%. The decision was communicated to employees via a memo, stressing the necessity of becoming leaner, more innovative, and primed for the next phase of growth. With Tesla being the world's most valuable vehicle-maker, this move underscores strategic adjustments amidst broader challenges within the electric vehicle (EV) sector.

Andrew "Drew" Baglino, a longstanding executive at Tesla heading the powertrain and energy engineering team, revealed his departure from the company after 18 years. His decision, along with other key executives leaving, suggests that Tesla's growth trajectory is encountering obstacles. Michael Ashley Schulman, Chief Investment Officer at Running Point Capital Advisors, noted that these departures signify more significant challenges for Tesla than the job cuts themselves.

Analysts from Gartner and Hargreaves Lansdown attributed the layoffs to cost pressures amid Tesla's investments in new vehicle models and artificial intelligence. The company has faced hurdles in refreshing its vehicle lineup amidst consumer reluctance due to high interest rates. Additionally, the influx of affordable EVs from China has intensified competition in the market.

Tesla is expected to release its quarterly earnings later this month, following a decline in vehicle deliveries during the first quarter, marking its first decrease in nearly four years. Recent measures such as reduced production at the Shanghai Gigafactory and adjusted shifts for Cybertruck production in Austin reflect Tesla's response to shifting market dynamics.

Despite challenges, Elon Musk has refuted reports of shelving plans for an affordable Tesla model, underscoring his commitment to making electric vehicles accessible to a broader audience. Tesla's shares experienced a slight decline in premarket trading following the announcement of layoffs, highlighting investor sentiment amidst the company's evolving strategy.