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Two of Tesla Inc.s top executives have left in the midst of the carmakers largest-ever round ofjob cuts, as slowing electric-vehicle demand leads the company to reduce its global headcount by more than 10%.

The cuts could reach closer to 20% in some divisions, two people familiar with the matter say.

In addition, Senior Vice President Drew Baglino resigned from the company, he said on X Monday, confirming an earlier Bloomberg report. Baglino been one of just four named executive officers at Tesla, leading engineering and technology development for its batteries, motors and energy products.

The 18-year company veteran who co-hosted earnings calls and shared the stage with Chief Executive Officer Elon Musk at multiple events, including Teslasinvestor dayjust over a year ago is leaving along with Rohan Patel, the carmakers vice president of public policy and business development. Patel alsoconfirmedhis departure on social media, and Muskrespondedbythankingboth executives.

The carmakers shares dropped more than 3% Monday. The stock has fallen 33% this year.

Musk announced the decision tocut headcountby potentially more than 14,000 people globally amid the deteriorating outlook for EV sales. In an email to staff, the CEO cited duplication of roles and the need to reduce costs.

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, Musk wrote in the memo, which was seen by Bloomberg News. There is nothing I hate more, but it must be done.

Leaders at Tesla were given aggressive goals to cut costs in their organizations and license to take strong action in reaching them, according to one of the people. That included deeper cuts in some cases beyond the threshold Musk had outlined, the person said.

The departure of Baglino is likely to reinforce concerns among some investors aboutsuccession planningat Tesla, where Musk has been CEO since 2008. The billionaire leads six companies and doesnt devote his full time or attention to the worlds most valuable automaker. Musk also said early this year that he preferred tobuild products elsewhereunless hes awarded around 25% voting control.

The CEO lost another top deputyin August, when Zachary Kirkhorn stepped down as CFO after 13 years with Tesla.

Its not clear whether the departure of the top Tesla executives was connected to broader struggles at the EV maker. Tesla reported vehicle deliveries early this month that missed expectations by awide margin, posting its first quarterly decline in four years.

Several analysts are bracing for the EV makers sales to potentiallyshrinkfor the year, citing slow output of its newest model theCybertruck and a lull in new products until the company starts producing a next-generation vehicle late next year.

Tesla ended last year with 140,473 employees, almost double its total three years earlier. Its been ramping up output at two plants one in Austin, and the other outside Berlin that started cranking out Model Y sport utility vehicles in early 2022. The company startedslashing pricesacross its lineup as those facilities reached higher volumes.

Over the years, we have grown rapidly with multiple factories scaling around the globe, Musk wrote in the email, which was reported earlier Monday by the blog Electrek. With this rapid growth there has been duplication of roles and job functions in certain areas.

Musks biographer, Walter Isaacson, described Baglino as a personable engineer with an easy laugh. In his book on Musk published last year, Isaacson recounted a tense first meeting Baglino had with the CEO over how many battery cells Tesla would need to hit its range target.

I never want to be in another meeting with Elon, Isaacson quoted Baglino saying to Tesla co-founder J.B. Straubel, who left the company in 2019 but joined its board of directorslast year.

Isaacson writes that Straubel reassured Baglino, whos quoted saying that Musks battery-cell calculation proved correct.

Read More:Musk Vetoing a $25,000 Tesla Comes Back to Bite

Baglino has netted about $96 million from periodic share sales since he was appointed a senior VP and had to start publicly disclosing his transactions, according to Bloomberg calculations. The sales have been executed under multiple pre-arranged trading plans, filings show.

Baglino and Teslas board chair, Robyn Denholm, set up share-trading plans late last year allowing them tosell significant sumsof stock. Baglino made arrangements to potentially sell up to 115,500 shares through the end of this year, according to aregulatory filing.

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Tesla's top engineering exec, who led development of critical technologies, has resigned after 18 years, adding to ... - Fortune