TMTPost -- Tesla Inc.'s largest ever layoffs may hit much harder to some of teams it operated in China than the U.S. electric vehicle (EV) heavyweight made public.

Credit:Tesla

Tesla China launched layoffs across a wide range of departments earlier this week, and sales people were the worst hit as some of departments have already completed their optimization, reported Chinese news media outlets including ifeng.com. Unlike other automakers who sell through franchised dealerships, Tesla sells directly to consumers through its network of worldwide offline retail stores. Accordingly, the new round of layoff affected staff including salesmen at these retail store in China. It was reported that more than 20% of Tesla China workforce could be cut , and laid-off employees are offered a severance package of N+3, namely, the severance pay amounted to one-month pay per year of service plus three months' monthly wage.

Some departments will have to reduce more than 20% of their staff during Tesla China's layoffs, the report cited people familiar with the matter. It was said that the average impact ratio among departments is 20% but few of them will cut by 50%. Tesla China provides various severance packages ranging from N+1 to N+3, and the affected employees who quit the day which they are notified their termination will receive N+3 package, according to the report. An employee revealed several internal staff received layoff letters along with compensations amount details at Tuesday afternoon, right after Tesla's global layoff decision was widely reported.

Over 20% is a layoff ratio much more than Tesla CEO Elon Musk disclosed earlier this week. In his memo to employees seen by media outlets Tuesday, Musk said his company decided to cut its worldwide headcount by more than 10%, the largest ever layoffs in its two-decade history. As of end of 2023, Tesla's global workforce has risen from around 100,000 in late 2021 to 140,473, according to fillings with U.S. regulators. Based on the reported layoff scale, Tesla will reduce about 14,000 of jobs.

"As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity," CEO Elon Musk told employees in a memo seen by media outlets including CNBC. Musk stressed how hard the layoff decision Tesla made to facilitate the future growth. "There is nothing I hate more, but it must be done. This will enable us to be lean, innovative and hungry for the next growth phase cycle," Musk said in the memo.

The layoffs are set to affect workers not just in Tesla's home market the United States, but also in another major market China, across sales, tech and engineering. It was reported that Tesla China has asked executives identify positions that are critical to their team these months and some of them were asked to rank team members based on performance. Reuters' sources said members of Tesla China sales team were being notified to be sacked and one said more than 10% were losing their jobs. Gigafactory Shanghai was said to be laid off several dozen people, only a small proportion of staff.  Some of Tesla departments were said to be gutted by 20% and even hit high performers, which were largely due to poor financial performance, TechCrunch learned.