Tesla launched yet another round of layoffs this week as CEO Elon Musk struggles to compensate for slowing sales and a 55% drop in first-quarter earnings. The latest cuts mean Tesla will see total U.S. employment drop as much as 20%, according to one report, with some departments, including its Supercharger operations, eliminated entirely.
Tesla CEO Elon Musk’s pet Cybertruck project hasn’t generated the expected response.
Workers in Tesla’s engineering, software and services teams have been notified of new job cuts, according to a new report. The automaker has made a series of workforce reductions over the past month and, said Electrek, the latest round could mean a total 20% drop in employment – double what CEO Elon Musk originally announced in April.
Last week, word leaked out that Musk had sought the resignation of two senior executives, including Rebecca Tinucci, the head of Tesla’s Supercharger business, along with Daniel Ho, who headed the automaker’s new vehicles program. Both of their departments reportedly are being eliminated. Allie Arebalo, the head of Tesla’s HR department also tendered her resignation last week, as have several other senior officials.
Musk wields the ax
As of the end of 2023, Tesla had 140,273 employees worldwide. At least 10% were scheduled for dismissal based on the plan Musk announced last month. The initial cutbacks went off badly, a number of employees revealing that they only learned they were axed when they tried to report for work but discovered they were locked out. In the U.S., the first round impacted 6,700 workers in California, Nevada, New York and Texas.
Even with an update to the aging Model 3, Tesla sales slid during the first quarter.
Additional reductions came last week, website The Information reporting hundreds more staffer were cut at product development and Supercharger operations. That raised questions about what would happen to the company’s public charging network – the largest in the U.S. and general considered the most reliable. The Wall Street Journal reported that work on more than a dozen new Supercharger sites in Texas were put on hold. Musk subsequently responded to the reports, indicating the network would grow more slowly than previously planned, though there would be more emphasis placed on reliability.
The latest round of reductions appears to dig even deeper, targeting software, services and engineering operations.
Going “hard-core”
“Hopefully these actions are making it clear that we need to be absolutely hard core about headcount and cost reduction,” Musk wrote in a corporate e-mail last month. “While some on exec staff are taking this seriously, most are not yet doing so.”
The new cuts, said Electrek, would shrink U.S. employment by 14,000. And there are growing concerns that the latest reductions-in-force won’t bring things to a conclusion.
In an internal memo sent to those losing their jobs, Tesla said “there was no reasonable accommodation” that could provide alternative roles for them at the company, according to The Verge, which was given the e-mail by an unnamed employee. “We have not identified any openings for which you are qualified.”
In an unusual move, a number of employees being released by Tesla have gone public on social media. That includes Jake Knowles who wrote on LinkedIn, “I have officially been laid off just two months after being promoted for the third time to a senior-level inspection coordinator.”
More Tesla News
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- Major New Layoffs Rock Tesla
Raising questions about Tesla’s future
Some new Supercharger sites has been halted in the wake of the Tesla cutbacks.
But the cuts have raised plenty of questions, especially in line with the direction Musk appeared to be taking Tesla before they were launched:
- Tesla lined up deals with virtually every automaker operating in the U.S., giving them access to the Supercharger network. But several competitors told Headlight.News on background they’re now questioning whether the operation will grow as promised;
- Musk last month reaffirmed Tesla’s commitment to development a new line of “affordable” EVs, but the departure of Ho and his team – along with the new engineering cuts – raise concerns about whether there’ll be the necessary staff to pull the project together;
- Other cuts could impact key software projects, notably the completion of Tesla’s Full Self-Driving system and its plan to bring robotaxis to market.
Reversing losses
The cuts were triggered by Tesla’s unexpectedly weak first-quarter performance. Deliveries were expected to be off but still fell short of Musk’s original forecast. Earnings also missed the mark, coming in 55% below year-earlier numbers.
Wall Street hasn’t been sure what to make of what’s happening at Tesla. The company’s stock, traded under the Nasdaq ticker TSLA, had fallen by roughly 40% since the beginning of the year, bottoming out at $138.80 a share, before the cuts began. The stock rebounded in late April based largely on news of a deal Musk negotiated in China. But investors have grown increasingly nervous since word of last week’s cuts made headlines.
As of mid-afternoon on Tuesday May 7, Tesla shares were sliding, at one point off by about $7.
Downturns are an ideal opportunity to eliminate fat and underperforming employees. It hurts those let go in the short term, but with the current low unemployement rate, it’s only temporary.
If they want to gamble, the ‘Big Three’ may want to pick up a few of those let go to learn a bit about Tesla’s (prior) plans.
They will, as will “transplant” brands.