Demand for electric vehicles in Europe slows, Tesla's Berlin factory lays off 1,700 workers.

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Tesla has reduced the number of employees at its Gigafactory near Berlin by about 1,700, highlighting weak demand in the European electric vehicle market and the company’s continued cost-control strategy. This is the latest sign of the automaker’s global plan to cut expenses.

According to Germany’s Handelsblatt on the 22nd, internal documents cited by the newspaper show that the factory in Grünheide currently employs 10,703 people, a decrease of about 14% compared to the number disclosed before the 2024 union election. This is Tesla’s only production base in Europe.

This round of layoffs is an extension of Elon Musk’s global personnel reduction plan announced in April 2024, aiming to cut over 10% of employees to control costs and enhance efficiency. In fact, Musk had already set a “10% quarterly elimination” management threshold as early as May 2018.

The layoffs also fit a broader trend heading into early 2026. Manufacturers and tech companies continue to streamline operations in response to slowing demand growth, tighter financing environments, and pressure to protect profit margins after several years of aggressive expansion.

Tesla pulls back on automotive expansion, bets on AI and Robotaxi

In 2025, Tesla will shift its strategic focus from rapid expansion to business integration. Management will focus on cost control, factory efficiency, and cash preservation, as aggressive price cuts and sluggish demand have squeezed the profit margins of the automotive business.

This shift comes as the European EV market is experiencing a noticeable slowdown in growth. After several years of rapid expansion, manufacturers now face a tougher competitive environment and more cautious consumer spending.

Although the traditional automotive business is losing growth momentum, Tesla’s stock price has shown relative resilience. Investors are increasingly focused on the company’s long-term goals in robotaxi services, autonomous driving software, and artificial intelligence, seeing these as potential engines for high-margin growth.

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