It was looking to be a very good week for Tesla, news of a weekend deal with the Chinese government sending the EV maker’s stock soaring. But that’s so yesterday in the 24-hour news cycle. And word that CEO Elon Musk has dismissed two key executives – with their entire staff set to follow – took the steam out of Tesla’s nascent stock rebound.
Rebecca Tinucci oversaw Tesla’s Supercharger program.
Two senior Tesla executives were dismissed by CEO Elon Musk, according to a report by The Information on Tuesday. And hundreds of their staff are set to by laid off in the coming days, according to the business and technology news service.
The ousters include Rebecca Tinucci, the head of Tesla’s Supercharger business, along with Daniel Ho, who has headed the automaker’s new vehicles program. The Information also reported that about 500 employees working for Tinucci will be dismissed, while all of the employees reporting to Ho also will be released.
The news comes just days after another senior executive, Daniel Baglino, tendered his own resignation. Baglino had served as head of powertrain engineering.
Going “absolutely hard core”
Tesla also will disband its public policy team, according to the Tuesday report. Its director Rohan Patel, announced his departure, along with Baglino, earlier in the month.
Daniel Ho ran the Tesla new vehicles program.
As of the end of 2023, Tesla had 140,273 employees worldwide. At least 10% were scheduled for dismissal. It’s unclear whether the departures by Tinucci, Ho and Patel are part of that move or will be added to the total reduction in force.
But the high-profile departures are expected to send a message, according to Musk, quoting an e-mail it received.
“Hopefully these actions are making it clear that we need to be absolutely hard core about headcount and cost reduction,” Musk wrote. “While some on exec staff are taking this seriously, most are not yet doing so.”
Stock rebound runs into the wall
Tesla had already announced plans to cut 10% of its workforce, a move reflecting the automaker’s recent sales slump and a 55% decline in year-over-year earnings during the first quarter.
Those and other setbacks had hammered Tesla’s stock price which hit a 52-week low of $138,80 earlier in late Aril, down from $248.42 at the beginning of the year. But shares traded as TSLA on the Nasdaq exchange rebounded as high as $197.94 on April 29, investors responding favorably to the announcement that Tesla had struck a deal with the Chinese government over the weekend. The deal would end restrictions on the sale and use of Tesla’s semi-autonomous Full Self-Driving system which could yield substantial new subscriptions fees while also helping Tesla battle back against increasingly competitive Chinese EV brands.
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Shrinking the executive ranks
What’s clear is that Tesla isn’t limiting its job cuts to lower-level employees. Baglino was once seen as a potential successor to Musk. He helped build the company’s commercial energy storage business, among other things. It’s one of the company’s most profitable operations. He also has overseen powertrain operations and battery development. One of his key projects, however, the production of Tesla’s 4860 cell, has run into serious trouble.
Once seen as a possible Musk successor, Drew Baglino resigned in April and cashed out his options for $181 million.
Upon his departure, Baglino sold off most of the vested stock options he’d accrued. Translated into 1.14 million shares, he pocketed $181 million.
As for Tinucci, her departure has triggered some questions about the future of the Supercharger program. She helped negotiate high-profile deals with manufacturers including Ford, Volkswagen, Toyota and Hyundai that will give them access to the well-respected Tesla public charging network. The agreements also will have them migrate to the EV maker’s NACS charger plug. It’s yet to be seen how the departure of the entire team – if the report proves accurate – might affect future expansion plans for the Supercharger system.
The ouster of Ho and his team raises some additionally serious questions.
Tesla has faced criticism from a number of analysts and investors for falling behind on the launch of new products over the last several years. The Cybertruck debut was well behind schedule. It has been widely criticized and sales are expected to be marginal for at least the near future. The Tesla Semi rollout has been slow. And there is no clear date for the launch of the second-generation Tesla Roadster. Musk last week countered reports that claimed a program focusing on low-cost EVs was dead. But those products are still several years away and it is unclear how they will be impacted by the loss of Ho’s team.
What’s next
It’s far from clear that the bloodbath at Tesla is over. Musk previously warned that he would demand still other managers resign if they maintain teams with “more than three people who don’t obviously pass the excellent, necessary and trustworthy test.”
Whether investors feel they can trust Tesla to resolve its broader problems is uncertain, however. Tuesday’s news reversed a brief reprieve for the company’s stock price, with TSLA shares ending the day down about 30% since the beginning of the year.
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