Tesla has announced layoffs of “more than 10%” of its global workforce in an internal company-wide email.
For the previous few months, it has looked like Tesla could be preparing for a round of layoffs. Tesla told managers to discover critical team members, and paused some stock rewards while canceling some employees’ annual reviews. It also reduced production at Gigafactory Shanghai.
Then, over the weekend, we heard rumors that these layoffs were about to occur, which got here to us from multiple independent sources, as we reported on yesterday. The rumors indicated that layoffs could possibly be as high as 20%, and as well as we heard that Tesla would shorten Cybertruck production shifts at Gigafactory Texas (despite CEO Elon Musk’s recent insistence that Cybertruck is currently production constrained).
Now those rumors have been confirmed – though with a lower number – in a company-wide email sent by Musk, which leaked soon after it was sent. The full text of the e-mail is below:
Over the years, we’ve grown rapidly with multiple factories scaling across the globe. With this rapid growth there was duplication of roles and job functions in certain areas. As we prepare the corporate for our next phase of growth, it is incredibly essential to have a look at every aspect of the corporate for cost reductions and increasing productivity.
As part of this effort, we’ve done a radical review of the organization and made the difficult decision to scale back our headcount by more than 10% globally. There is nothing I hate more, nevertheless it should be done. This will enable us to be lean, modern and hungry for the subsequent growth phase cycle.
I would love to thank everyone who’s departing Tesla for his or her labor over time. I’m deeply grateful in your many contributions to our mission and we wish you well in your future opportunities. It could be very difficult to say goodbye.
For those remaining, I would love to thanks prematurely for the difficult job that continues to be ahead. We are developing some of essentially the most revolutionary technologies in auto, energy and artificial intelligence. As we prepare the corporate for the subsequent phase of growth, your resolve will make an enormous difference in getting us there.
Thanks,
Elon
Additionally there are reports that some employees have already been locked out of system access.
While we don’t have a precise percentage, “more than 10%” means no less than 14,000 employees can be laid off, as Tesla’s worker headcount is somewhere on the order of 140,000 total employees (Notably, Tesla’s headcount has not experienced as much “rapid growth” in recent times because it has prior to now, making that line of the e-mail ring somewhat hole).
And we don’t know which specific teams can be most or least affected by Tesla’s layoffs, but two well-known Tesla executives at the moment are missing the “Tesla-affiliated” badge on twitter – Drew Baglino and Rohan Patel.
Baglino is still listed as Senior VP of Powertrain and Energy on Tesla’s website, and Patel is Tesla’s Policy chair who has also served as an impromptu Tesla PR arm on twitter, commenting on news within the place of Tesla’s still incomprehensibly-nonexistent PR department.
While this may occasionally not mean anything, the badge does still exist and is shown on Franz von Holzhausen and Martin Viecha‘s profiles, so it’s conspicuous that it’s missing from the aforementioned executives.
The news follows a foul quarterly delivery report wherein Tesla significantly missed delivery estimates, and had a rare year-over-year reduction in sales. While Tesla doesn’t break out sales by nation-state, the predominant dip seems to have come from China, where Chinese EV makers are ramping quickly each within the domestic and export market.
Tesla will deliver its quarterly profits report next Tuesday, April 23. Analysts estimate that Tesla will still turn a profit of around 50 cents a share, down from 85 cents a share in Q1 2023.
In previous quarters, Tesla has guided for a “pause” inbetween growth phases, expecting that sales growth could be more modest until the discharge of next-gen vehicles just like the ~$25,000 Model 2 (though Reuters recently reported that Musk desires to shift Tesla’s focus to a robotaxi model, which Musk denied just hours before announcing the robotaxi unveiling event).
Tesla’s layoffs come at a time when many other firms within the tech industry are laying off staff, in an apparent game of follow-the-leader while industry profits are still high.
Electrek’s Take
One issue I’ve all the time had with Tesla is that, if anything, it appears like headcount in the corporate is too low, not too high. There are so many issues that appear to fall through the cracks (each on a high and low level – Tesla owners, have you ever ever had trouble getting in contact with someone in service?), and I believe the explanation for it is because Tesla employees are sometimes overworked. This results in burnout and turnover, a scarcity of institutional memory, and a scarcity of ownership for certain problems that don’t get solved.
Tesla owes so much of its success to its “startup mentality,” where it’s all hands on deck to grow the corporate that’s shaking up a pair of the biggest entire sectors on earth – automotive and energy. The undeniable fact that it has shaken up these sectors so successfully is proof that this approach has been effective.
And that helps in recruiting as well – there are so much of jobs that claim they’re changing the world, but Tesla can really claim that it legitimately is on the vanguard of the changing transportation industry. That’s an amazing strategy to recruit the perfect and brightest, and because of this, the corporate hasn’t needed to worry much about losing talent because it has such a recruitment advantage and may take its pick of the brightest minds on the market (though that recruitment advantage could possibly be changing, given Musk’s increasingly distasteful behavior).
However, Tesla is 20 years old now. It’s an unlimited and established company. It must mature and have more established processes, less turnover, and more security for its employees. These sorts of things help reduce errors and increase morale.
While these layoffs are a response to a discount in sales (but not a loss of money if analysts are to be believed – Tesla is probably going still profitable, though we’ll hear more next Tuesday), they will’t be helping with morale.
Remaining employees will wake as much as an email from a CEO who’s increasingly absent as he spends all of his time hooked on an app he wasted $44 billion on (yet demands more stock while firing 10% of the corporate), see their already-large workloads get larger, and wonder if the sensation of changing the world is de facto price all these newly-apparent downsides. Maybe they’ll wonder if getting poached by the brand new tech buzzword wouldn’t be so bad.
Which is a shame, because we do need Tesla to maintain pushing things forward, and to maintain attracting the perfect and brightest. While Pandora’s box is open and EVs are here to remain at this point, regardless Tesla’s ups and comparatively-rare downs, the remaining of the industry remains to be trying hard to pump the brakes on the transition, even when it means America can be less competitive in the event that they get their way.
Tesla is one of the few entities that’s large enough and committed enough to dragging those timelines forward, whether the remaining of the industry likes it or not. We need a healthy Tesla, and for that, we’d like good worker morale.
Credit : electrek.co
