Tesla plans to layoff more than 10% of its global workforce after reporting a disappointing first-quarter sales, multiple media outlets reported on Monday.

CEO Elon Musk explained in a memo sent to employees that the layoffs could affect about 14,000 of the 140,473 workers employed by the company.

“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 said in the memo that was obtained by the electric vehicle website Electrek.

According to Electrek, Tesla asked managers to identify critical team members and paused some stock rewards while canceling some employees’ annual reviews. Moreover, the company has also reduced production at Gigafactory Shanghai.

“As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally,” he said in the memo.

In addition to the layoffs, two key executives, Andrew Baglino and Rohan Patel, announced their departure which adds to the shakeup within the company. 

Baglino served as senior vice president of powertrain and energy engineering for 18 years and Patel served as the senior global director of public policy and business development for eight years, announcing their departures on the social media platform X. Their exits could potentially impact Tesla’s future strategies and operations.

This year, Tesla faced heightened difficulties due to logistical challenges in the Red Sea among others. 

The company’s supply chain suffered from disruptions stemming from Yemen’s Houthi maritime attacks in the Red Sea, which has impacted the component availability. 

Additionally, Tesla’s gigafactory located close to Berlin had to temporarily stop production following a suspected arson at a nearby electricity substation.