Carvana laid off 2,500 employees, many of them over Zoom (updated)

The move affects approximately 12 percent of the company's workforce.

Devindra Hardawar / Engadget

On Tuesday, online used car retailer Carvana laid off 12 percent of its workforce, reports Protocol. According to Twitter reports, the startup incited “mass hysteria” among workers when it sent a company-wide email at 7:30AM informing everyone of the impending job cuts but not specifying who would be affected. In the end, Carvana told approximately 2,500 workers, many of them in “operational positions,” they no longer had a job with the company. The startup shared the news in person and in a Zoom call some employees said was pre-recorded, a claim Carvana strongly disputes.

"Saying goodbye to any team member is not a decision we take lightly and we aim to be transparent, thoughtful and supportive throughout this process, including providing meaningful assistance, resources and support to impacted team members," a spokesperson for Carvana told Engadget. "We believe these decisions, while extremely difficult, will result in Carvana restoring a better balance to our operations and facilitate the company returning to efficient growth on its mission to change the way people buy and sell cars."

Despite finding success early in the pandemic, Carvana has struggled recently. During its first-quarter earnings call, the company reported a $260 million net loss, and it blamed the layoffs on the financial headwinds that have come its way and slowed growth.

"Recent macroeconomic factors have pushed automotive retail into recession," the company said. "While Carvana is still growing, our growth is slower than what we originally prepared for in 2022, and we made the difficult decision to reduce the size of certain operations teams to better align with the current needs of the business."

On the same day Carvana told employees of the layoffs, the company announced it would spend $2.2 billion to buy a handful of used-car auction sites from Kar Auction Services.

Update 05/11/22 9:01AM: Added additional context from Carvana, and updated the title to reflect not all 2,500 employees laid off this week were told the news over Zoom.