By on October 14, 2017

tesla factory fremont, Image: Tesla Motors

Tesla employees jockeying for scarce parking spaces outside the company’s Fremont, California assembly plant and Palo Alto headquarters could soon find it easier to locate a spot.

The electric automaker reportedly laid off hundreds of workers this week — a move that comes at an particularly stressful time for the company and its employees. At just 260 units, third-quarter production of the long-awaited Model 3 sedan fell far short of predictions, with CEO Elon Musk blaming production bottlenecks for the slow trickle of highly sought-after vehicles.

Meanwhile, the exact nature of the fired employees is the subject of some debate.

The Mercury News first reported the layoffs late Friday. “Multiple” former and current employees tell the publication the laid-off workers include “trained engineers working on vehicle design and production, a supervisor and factory employees.”

Those same workers estimate the number of layoffs at 400 to 700 employees over the past week, with many allegedly told with no warning. The company’s assembly plant employs roughly 10,000. Tesla, meanwhile, won’t cop to the number of layoffs (and doesn’t call the dismissals “layoffs”), telling the publication the departures came after a routine performance review.

“As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures,” a Tesla spokesperson told The Mercury News. The spokesperson claims the layoffs weren’t from the manufacturing realm — rather, marketing and sales divisions took the brunt of it.

This statement diverges quite a bit from the workers’ observations. One employee, Juan Maldonado, who was let go after four years with the company, claims that about 60 employees from his area of the factory also got their goodbye notice. Another employee told Reuters Tesla fired him, even though he’s never had a bad review.

“It’s about 400 people ranging from associates to team leaders to supervisors,” the former worker said of the laid-off employees. “We don’t know how high up it went.”

Occurring in the background of the departures is the “production hell” Musk promised his employees. By all accounts, they got exactly that. Earlier this month, a report arose of workers hand-building Model 3 components on the factory floor — as late as early September — as the automated production line remained idle. Musk’s stated production goal for the end of the year is 5,000 vehicles per week, ramping up to a seemingly impossible 10,000 units/week in 2018.

[Image: Tesla]

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113 Comments on “Amid Production Headaches, Tesla Lays Off Hundreds: Report...”


  • avatar
    jalop1991

    Can’t make enough cars to satisfy demand
    Lays off workers
    Profit!

    or something like that.

    Seriously, though, this could be completely innocuous. And who cares if you’ve never had a bad review, dude? They didn’t want you. Move on with your life.

    • 0 avatar
      JohnTaurus

      “And who cares if you’ve never had a bad review, dude? ”

      Well, dude, when the company makes a statement like this as to why the layoffs occurred:

      “…performance reviews also occasionally result in employee departures,”

      then bringing up having no bad reviews would seem to be natural. Dude.

      • 0 avatar
        jalop1991

        If they don’t want you, they don’t want you.

        You have two choices on how to spend your time and energy:

        a) fight The Man for your job back, where you wouldn’t be welcome anyway; or

        b) go get another job.

        You are not entitled to the Tesla job, nor are you entitled never to have something like this happen in your life.

        • 0 avatar
          Big Al From 'Murica

          Maybe…or maybe the remaining workers suddenly feel vulnerable and are open to representation from the UAW.

          • 0 avatar
            Lorenzo

            I suspect “open to representation from the UAW” was the firing offense. That desire is the usual response when management imposes “production hell” on its employees.

    • 0 avatar

      Not being fired from your current job is a fundamental human right and I think ACLU should be involved and provide free lawyers for class action against Tesla. As usual US is behind EU in human rights where employer cannot fire or layoff employee. Also Tesla fired workers who actively supported union spending time on activities not related to work.

      IMO they should fire robots which stayed idle during work hours. Robots might also have rights but did not organize yet so it is pretty safe to fire them.

      • 0 avatar
        Hummer

        https://goo.gl/images/dXRIuL

      • 0 avatar
        jalop1991

        “Not being fired from your current job is a fundamental human right”

        OMG, did you just actually say that???

        No it’s not. They can let you go at will, just like you can let them go at will.

        So you honestly think that once I’m in, that should be it as far as the employer is concerned?

        Your type of thinking is what destroys any concept of being in business.

        • 0 avatar
          JimZ

          “Your type of thinking is what destroys any concept of being in business”

          So is the constant churn of firing and hiring people because of your incompetent recruitment.

          • 0 avatar
            jalop1991

            Firing losers beats hanging onto them simply because I made a mistake.

          • 0 avatar
            jkross22

            Incompetent recruitment? Poor planning? Impossible deadlines? CEO writing a check production can’t cash?

            This company is a mess.

          • 0 avatar
            JimZ

            “Firing losers beats hanging onto them simply because I made a mistake.”

            if you keep having to cut people because you keep “making mistakes,” who is the actual problem here?

    • 0 avatar
      danio3834

      I think you’re missing the point here. The company said they fired people for bad reviews, but if they didn’t actually get bad reviews, then they fired them for another reason. Perhaps cash flow, perhaps other business related reasons that suggest the company is struggling more than their spokespeople let on..

      • 0 avatar
        jalop1991

        “I think you’re missing the point here. The company said they fired people for bad reviews, but if they didn’t actually get bad reviews, then they fired them for another reason.”

        I don’t believe the company is obligated to tell me the facts behind any of their business actions or decisions.

        All I know is, they got rid of those people. They didn’t want those people. Those people can fight all they want, or they can move on with their lives. Which is more likely to give the results they want?

        • 0 avatar
          jkross22

          Depends on whether the people fired felt they were discriminated against and are in a protected class.

          • 0 avatar
            Caboose

            Correction: It depends on whether the jury in a civil employment discrimination class action suit feel they were discriminated against.

            Or, actually, it depends on whether those fired can convince a white-shoe law firm with a strong employment law litigation section in California to go up against Tesla… when those same lawyers likely drive Tesla’s cars.

        • 0 avatar
          danio3834

          “I don’t believe the company is obligated to tell me the facts behind any of their business actions or decisions.”

          Shareholders care, and the company has a degree of duty to report to them. I’ll assume your not one though. That’s still completely beside the point, the real reasons are speculative.

          “Those people can fight all they want, or they can move on with their lives. Which is more likely to give the results they want?”

          No one cares.

  • avatar
    el scotto

    400 to 700 workers? Perhaps they were no longer needed after production is ready to go (at last). Or the house of cards may be tumbling. Time will tell.

  • avatar
    ScarecrowRepair

    Could be routine layoffs of the worst-performing employees. Could be that X and 3 engineers now that their models are in production. Could be marketing as they realize word-of-mouth is good enough. Could be sales as they find more and more referrals, or work off that one year plus orders with deposits.

    I doubt it’s a sign of impending bankruptcy.

    • 0 avatar
      JohnTaurus

      “Could be that X and 3 engineers now that their models are in production.”

      Lol, yeah, thanks guys, but we will never need another new model to be designed and engineered, or a redesign of our current models to stay competitive, so goodbye!

      I wonder how many engineers Ford fires after an all-new (and highly successful) F-150 launches? I wonder how many production workers they fire when they can’t build the vehicles fast enough to meet demand?

      • 0 avatar
        stingray65

        I thought Elon was going to start building electric semi trucks, and the Model S is getting pretty long in the tooth, probably could use a refresh – and all those types of projects require engineers and marketers.

      • 0 avatar
        JimZ

        Someone on Ars Technica (in the comments) actually said- with a straight face- that Tesla would have been profitable last quarter if they had cut R&D spending because SG&A was covered.

        Apparently he doesn’t realize a good chunk of the “D” in that “R&D” thing is getting the Model 3 launched.

        Guess “canceling future product development” is the way to succeed in Tesla fanboy land.

      • 0 avatar
        EBFlex

        “I wonder how many engineers Ford fires after an all-new (and highly successful) F-150 launches?”

        LOL that’s pretty good! Asserting that Ford uses engineers. A bunch of monkeys with crayons are not engineers.

    • 0 avatar
      LS1Fan

      Could be that years of losing money is finally catching up to Tesla Motors,and now they have to cut payroll to keep the lights on.

      Given Teslas failure to make its overstated goals or a profit, the remaining staff members should be on LinkedIn looking for work by sundown if they’re smart. When Tesla Motors crashes there won’t be any warning from Musk and Co- besides the payroll checks bouncing that is.

    • 0 avatar
      APaGttH

      …Could be that X and 3 engineers now that their models are in production…

      Thanks for the design work boys, we are never designing a new electric car again so gooodbye. Given everything you know *wink* *wink* I’m sure you’ll have no problem finding a job at BMW, Mercedes, Toyota, Hyundai, Ford, Mitsubishi…

      Good luck enforcing that non-compete in a California court.

    • 0 avatar
      Whatnext

      I didn’t even know Tesla did any marketing!

  • avatar
    Fred

    Maybe these were the guys supporting a union?

    • 0 avatar
      stingray65

      That is exactly what I was thinking.

    • 0 avatar
      stuki

      Particularly so, if they were using “production hell” as an opportunity to illustrate the supposed benefits of unionization. Instead of goingwith the program, hunkering down and burning the candle at both ends until things “hopefully” normalize a bit.

    • 0 avatar
      HotPotato

      That’s my guess. A friend of mine worked at, uh, an extremely well-known shipping company when a unionization effort was on. According to her, the company executed a stealthy plan to dig up or gin up at least one documented offense for each known union supporter–even if it was something ridiculously innocuous that would never normally be written up or even mentioned. They quietly prepped an HR clerical assembly line. Then, they simultaneously fired every single one of the hundreds of union-supporting employees “for cause,” literally running wave after wave of them through this HR mill nonstop for days. “How do you know this?” I asked. “I did the firing,” she said. “But that’s totally illegal, isn’t it!” I said. She just smirked.

      Yeah, Tesla. You just happened to fire 2% of your workforce “for cause” simultaneously, and first-hand accounts contradict your claims about what departments were affected. Nothing to see here, move along…

      • 0 avatar
        jalop1991

        “According to her, the company executed a stealthy plan to dig up or gin up at least one documented offense for each known union supporter–even if it was something ridiculously innocuous that would never normally be written up or even mentioned. They quietly prepped an HR clerical assembly line. Then, they simultaneously fired every single one of the hundreds of union-supporting employees “for cause,” literally running wave after wave of them through this HR mill nonstop for days. “How do you know this?” I asked. “I did the firing,” she said. “But that’s totally illegal, isn’t it!” I said. She just smirked.”

        Y’all act like you’ve never been employed by someone else.

        This is how it works. They can choose to let things go, or they can choose to run the HR manual right down to the letter. And it’s THEIR choice. And no, it’s not illegal.

        This is news to you???

        And notice, this is how society in general works. We are all criminals, doing technically criminal things every day. And if Big Brother decided he wants a pound of your flesh, He Will Get It–and it’s no harder than simply documenting something you do every day, and choosing to make something of it (even as your friends continue doing the same thing and remain unmolested by John Law).

  • avatar
    APaGttH

    If Tesla employees 33,000 and they let go of 700, that is 2% of workforce, which doesn’t meet the requirements of the Warn Act, so no material notice was required under SEC regulations (as I understand it 4% is the threshold for a Warn Act filing).

    Welcome to the world of tech boys because this is how technology companies do it. Was it performance? Was it a layoff? Was it we’re killing this project so we need to wipe out this group working on it? Was it we’re paying these people too much so we can add them to the RIF to get them out? Was it they didn’t play well with others and a group of managers wanted these individuals out?

    Yes.

    And no.

    And maybe.

    For the rest of you – work harder because you heard the rumour about next quarter.

    • 0 avatar

      The article seems to indicate they would have to file with the state of CA for any amount iver 50 in a week. Tesla did not file and claims it’s because the are all performance firings no layoffs.

    • 0 avatar
      golden2husky

      My long late grandfather who was a carpenter told me that on Friday when the boss came around with the paychecks, somebody got fired. Every single Friday. The reason was obvious – to make all of them work to the bone so they would not be the next Friday cut. Looks like that type of America is coming back into favor. I’d hate to be entering the workforce as a newbie today…

      • 0 avatar
        ToddAtlasF1

        Don’t worry. The recent college grads entering the workforce are made of stern stuff. They’ve spent their entire lives dealing with bullying, conflicting ideas, fighting their own battles, and being held accountable for the quality of their performance.

      • 0 avatar
        jalop1991

        “Looks like that type of America is coming back into favor. I’d hate to be entering the workforce as a newbie today…”

        Are you kidding? That never stopped.

        Maybe you haven’t been paying attention.

  • avatar
    mikey

    What I have no idea what precipitated such a move. Nor am I in a position to speculate….Permanent, and short term layoffs are a part of the industry.

  • avatar
    civicjohn

    Maybe they couldn’t physically hold up the body parts while someone else was doing the spot-welding.

  • avatar
    ToddAtlasF1

    This reminds me of working in IT at Bear Stearns. In the weeks leading up to September 11, 2001, Bear was laying off employees left and right. People were about as much fun as you’d expect them to be when they’ve worked seven days a week in the hope of a payoff that they no longer believe will ever arrive.

    In the middle of this, a psychopathic managing director or principal from one of the profit centers sent out an email ordering everyone to smile at all times. He or she was tired of seeing everyone looking so glum when they still had their jobs, at least for the moment. He wanted us to know that the company was doing just fine. That even as our redundant and obsolete coworkers were vanishing, the company was still hiring new people with valuable skills; conceivably somewhere other than Manhattan.

    Amazingly, Bear Stearns survived another seven years, but I don’t think anyone who was there in 2001 had any illusions about their futures with the company after seeing layoffs being treated like failures of people who were all better at doing their jobs than the upper managers who let them go were at doing their own. Tesla may float on for several more months, held aloft by willful suspended disbelief on the part of their investors. The people who work there have had a glimpse behind the curtain now, and the good ones will leave.

  • avatar
    EBFlex

    We’re going to need more popcorn for this sh!t show…watching this company fail is the best thing I have ever seen.

    • 0 avatar
      Syke

      Why?

      You’ve got a problem with somebody succeeding in making an automobile that you have no desire to own? Gee, all it takes to amuse you is to wreck 10,000 other peoples lives.

  • avatar
    Null Set

    I think I know what’s behind this. This is to make the company look more attractive to stock analysts (or, in this case, slightly less hopeless). A key metric used by anlysts to gauge the attractiveness of a company for investment is profit per employee. So the fewer employees, the better that number will look even if that profit is actually a loss. Welcome to the wonderful world of corporate hocus pocus dominocus. Cutting staff in a situation of investor nervousness is also a classic ploy to calm the jitters.

  • avatar
    addm

    So many people want this company to fail. Can’t believe it. I doubt all of these people have short positions on Tesla stock. They r hanging on to every small little news to make it a doomsday for Tesla.

    • 0 avatar
      jack4x

      I actually am short TSLA and even I don’t want them to “fail”. Just confident that the cult-like following and stock price untethered from any rational relationship to earnings, cash flow, etc cannot last forever.

      The cars themselves are nice and the automotive market is improved by Tesla being a part of it. I test drove a Chevy Bolt yesterday on a whim and almost bought it on the spot. No way GM invests the effort and money into making such an impressive vehicle without Tesla’s existence.

      • 0 avatar
        addm

        Well I am long on Tesla and I have my reasons including but not limited to the cult like following (similar to apple), supercharger network, vehicles design, advantages of electric drivetrain, innovative ways of doing things.

    • 0 avatar
      civicjohn

      I too am short Tesla. Swore off all automotive stocks when the previous administration broke all the rules in a traditional bankruptcy with GM, nope everyone pretty much got wiped out except for the unions.

      But this one is too fun to watch, what year does anyone anticipate them generating 5000 cars a week?

      How ironic our tax dollars are supporting this.

      • 0 avatar
        JimZ

        guys, none of us care about what you’re doing with your shares of TSLA.

      • 0 avatar
        TW5

        Traditional bankruptcy wouldn’t have helped investors. The issue was that the Obama admin announced a bailout, which induced some investment. Then the administration screwed over everyone who was dumb enough to think Old GM investors would get a seat at the table.

        I was one of those naive idiots. Fortunately, I purchased Ford at rock bottom, after extensive balance sheet analysis and research regarding DOE loans. In the end, I was only half stupid.

        Anyway, the moral of the story is don’t trust Obama. You end up looking like a complete tool. Unless you’re a titan of industry, the only thing you’ll ever get from the Democratic Party is losses and higher taxes.

        • 0 avatar
          JimZ

          traditional bankruptcy was impossible. It’s stunning how many of you have already forgotten what was going on in 2008-2009. the credit markets were basically frozen; there was no avenue for private debtor-in-possession financing. the .gov was a lender of last resort. the ONLY reason Ford managed to survive w/o BK is because Don LeClair mortgaged everything the company had in 2006 before the collaps.

  • avatar
    I_like_stuff

    The guy was “only” late for work twice in a month and he’s surprised he got fired? LOL This is the difference between junk built by UAW workers and Tesla. If you’re late 30 days in a row at a UAW junk plant, nothing happens. At Tesla you get fired. This is the way things are supposed to work.

    And firing 400 to 700 dead wood out of 10K employees is the GE/Jack Welch of doing things. Had Jack been running TSLA it would have been more like 1200.

    • 0 avatar
      JimZ

      I see you’ve bought into the lie of “forced ranking.” Jack Welch is not God. Forced ranking sucks because it doesn’t guarantee you’re getting rid of “dead wood.” it instead incentivizes backstabbing and under-the-bus-throwing amongst the workforce.

      Imagine if you were enrolling your kid in school, and the teacher told you that their policy was to fail the bottom 10% of the class every year regardless of letter/number grade.

      That’s what forced ranking is. if 90% of the kids in the class got an A, then the 10% who got a B+ or lower would be failed.

      Cutthroat environments benefit nobody. If every year you have to get rid of x% of employees who are “dead wood,” maybe take a look in the mirror and try to figure out why you’re always hiring the wrong people.

      Bad management always shifts the blame to their employees.

      • 0 avatar
        I_like_stuff

        GE stock price

        1981 (when Jack took over): $1.15
        200 1(when he stepped down): $38.00

        But please, tell me more how his forced rankings didn’t work and how they benefit “nobody:”…..

        • 0 avatar
          JimZ

          Another genius who doesn’t understand “correlation is not causation.”

          I mean, I could try and say the California wildfires are why my WiFi stopped working this morning. Hey, they happened at the same time!

          Besides, Mullaly took F from like $1 to $20 within a few years and didn’t need forced ranking.

          • 0 avatar
            EBFlex

            “Besides, Mullaly took F from like $1 to $20 within a few years and didn’t need forced ranking”

            Proof poor management and poor leadership can make stock price rise.

      • 0 avatar
        APaGttH

        Another thing on Jack Welch stack ranking, even Jack Welch says you can’t use it as a continuous policy, or you end up with the atmosphere as you described. A lot of people read to about page 2 on the book of Jack Welch and stop, as you noted.

        Another problem with forced stack ranking, even if it perfectly executed and free of all bias and politics, you will eventually reach a point that even your “low performers” would be middle of the road performers at the competition. You end up cutting good employees for no reason and feed your competitors skilled, hard working, intelligent people who are out for blood.

        • 0 avatar
          I_like_stuff

          Dead wood alway enters an organization and needs to be culled periodically. And besides this is irrelevant for Tesla as, this was their first (as far as I know) attempt that this.

          As for a political environment full of back stabbing, that is every corporate environment I’ve ever been a part of. It’s the nature of the beast regardless of how attrition is done.

        • 0 avatar
          JimZ

          The fact that Bob Nardelli is a proud Jack Welch acolyte should give anyone pause.

      • 0 avatar
        SCE to AUX

        @JimZ: Agreed.

        Forced ranking of employees is one of the worst management practices ever invented. Jack Welch is a soul-less cutthroat.

        If this is what’s happening at Tesla, I don’t like it.

        Whacking 5% of the plant’s workforce is a pretty drastic move, and as an engineer I find it interesting that they canned engineers, also. Maybe some of them are responsible for the design bugs that are slowing Model 3 production. Even if this was so, a little grace seems warranted.

        Instead, they just shot 1 in 20 of their plant workers at a critical time when you want everyone rowing together. As someone who has escaped countless layoffs/firings in my 30-year career, survivor guilt is a real thing, so I’d expect productivity to fall for a few weeks.

        • 0 avatar
          LS1Fan

          Tesla isn’t a car company-it’s a stock brokerage firm that builds cars on the side.

          Everything that firm does is intended to improve its Core Product- which is company stock,not the cars.

          Engineers and factory workers are critical for product development,which isn’t Teslas core product. Time will tell if Musk can substitute product revenue with marketing flash and investment income. Note that business plan didn’t work out well for Charles Ponzi. ……

        • 0 avatar
          APaGttH

          … As someone who has escaped countless layoffs/firings in my 30-year career, survivor guilt is a real thing, so I’d expect productivity to fall for a few weeks…

          Agreed. Survived countless layoffs also, and have had the axe come down on my head three times. In one case it was expected (M&A and HQ was moved to east coast and I made it clear I didn’t want to move), one was sweet relief, and the final one was a complete shock.

          To your point of survivor’s guilt, productivity definitely suffers post layoffs. It’s hard as a manager also, especially when you have nervous employees in 1:1s and you have to toe the company line. “All is well. All is well. You weren’t in the meeting I just came out of that shows how bad we’re missing numbers but I assure you, all is well.”

      • 0 avatar
        jkross22

        If that much dead wood is being hired, there’s a hiring manager problem.

      • 0 avatar
        bullnuke

        My former employer, the Largest Chemical Company in the World (and it ain’t DuPont) embraced the Jack Welch strategy in the late ’90s. Forced ranking was used for head count reduction and little else, especially for older/higher compensated employees. When the ranks weren’t being thinned sufficiently of these undesirables when using forced rankings within departments, weird forced rankings of people across differing departments were rolled out to target them. Drum-kickers in Production were ranked against Instrumentation Techs from the Maintenance Department to remove the “undesirable” older/higher compensated folks regardless relative importance of an associate’s job to the operation of the plant. Oh, and biannual re-application for your current job/position when added to the forced ranking made for a contentious and negative workplace. I was pretty happy walking out across the parking lot with my little banker-box full of personal items when they finally got me.

    • 0 avatar
      mikey

      @ I_like_stuff….”.Late 30 days in a row at a UAW junk plant, nothing happens”

      I like it better when you comment in an area where you DO know what your talking about !

      • 0 avatar
        JimZ

        Haven’t you learned yet? On the Internet, your opinion is as good as a fact if you think you’re smart. Even more so if you go around telling people how smart you are.

        • 0 avatar
          golden2husky

          I Like Stuff holds Neutron Jack up as an Ichan, something that speaks to how he feels humans should be treated. Safe to say he did not have to come home to his mortgage, two kids, and then tell his wife they can’t pay the bills despite being a stellar employee.

        • 0 avatar
          Big Al From 'Murica

          It is only fact when you end the post with “FACT” or start it with “Do some research”. FACT.

    • 0 avatar
      Big Al from Oz

      I like stuff,
      The institution I work for has had a problem removing the deadwood. Sacking someone took years to achieve.

      They’ve simplified the process now, but it still takes a year and a half.

      I don’t think Tesla had an issue removing deadwood in the past, and it would of done so. I think there are deeper underlying issue at Tesla. Tesla is under significant stress to produce or more accurately MASS produce a vehicle which Tesla is having issues delivering on.

      When it comes to the point of mass sackings, when you have significant production floor issues then the problem is deeply rooted.

      Elon Must has spent years talking up Tesla and he wasn’t required to really show the capacity of productivity of his vehicle manufacturing. Tesla has a productivity issue, that will not be resolved. This is after years of using other peoples and the governments money (still other peoples).

      The cost for each Tesla produced so far is a lot more than the cost to the consumer. He hasn’t got the luxury of using other peoples money to make up for the lack of investment into the primary area he really needed to. That is production line work and even robotics.

      Elon Must will be found out very soon, maybe he we can call him the Jackal of San Jose.

      • 0 avatar
        carguy67

        “… maybe he we can call him the Jackal of San Jose.”

        The Tesla plant is in Fremont, not San Jose, and San Jose has no affiliation whatsoever with Tesla. While I don’t know where Musk lives–I’m sure he has several nice digs–I very much doubt he owns a home in San Jose (it’s the least desirable area of the SV*).

        *I can say that because I live in San Jose.

      • 0 avatar
        ChichiriMuyo

        No, the cost of each vehicle is not above what the consumer pays. Tesla is in the middle of rampant expansion. That costs money that is totally unrelated to the cost of production.

    • 0 avatar
      Ar-Pharazon

      I’ve been in the automotive industry now for 31 years. I have never ever seen anyone get a bad PR and then get fired/laid off immediately. Not one person, let alone hundreds. Even during times of forced ranking, no one gets let go after one bad PR. At least not at the working-schmuck level. If layoffs are coming and you have bad PRs . . . yeah, you get the boot. But never “all is well, this guy did poorly this year, buh bye”. Saying this is BS at the highest level.

      I also spent several years at one of the name-brand consulting firms which was a meritocracy of the highest order, unabashedly “up-or-out” kind of place. They did not let people go en mass after every PR period. Don’t remember anyone ever being let go after PR period.

      BS at the highest level.

  • avatar

    How Japanese companies survive without firing anyone? Firing/hiring is a constant in Silicon Valley – thats how innovation works. In other news – Jeff Bezos is going to layoff significant amount of employees in Washington Post.

    • 0 avatar
      JimZ

      “How Japanese companies survive without firing anyone?”

      They don’t hire new people when they win new business.

      Seriously.

      And besides, it’s not like Japanese companies are in some perpetual state of prosperity. Sanyo is dead and gone, swallowed up by Panasonic. Sony has been losing money for years. Sharp had to be bailed out by Foxconn (which was a huge cultural slap in the face.)

      A lot of these companies would have been dead and gone but for the Japanese government.

      I bet a lot of the arseholes who complained about “Government Motors” would pale if they knew just how deeply the Japanese government had their hands in the company which made the Japanese car they love so much.

      • 0 avatar
        Big Al From 'Murica

        Man, Sanyo is gone? Guess I’m SOL for parts on that Cassette deck I dragged home yesterday. Ah well…seems to work so far.

        • 0 avatar
          JimZ

          the brand still exists in some markets, but yeah, Panasonic took over in 2011.

          • 0 avatar
            Big Al From 'Murica

            Well I’m guessing they wouldn’t have stocked parts for a 1979 cassette deck anyway but still, I hate to see the old school players in Hi-Fi go down but that industry as it was really is no more.

          • 0 avatar
            JimZ

            Japan Inc. has been a victim of its own success. Japanese business culture is both old-fashioned in many ways, and very inflexible. the electronics giants who owned the ’70s and ’80s have not been able to deal with the rise of Korea and China who can do the same things they can do, but cheaper and faster.

      • 0 avatar
        Big Al From 'Murica

        And though we rarely agree Jim, you are 100 percent on how deep the Japanese government is in their Auto Industry.

      • 0 avatar

        I worked with both Japanese and Korean engineers, And with Americans too of course. Japanese are 100% loyal to company. Koreans are more flexible. Some openly demonstrated disgust to military regime established by their management and most were looking for opportunities to immigrate to US by e.g. marrying Americans. I am talking about LG, Samsung and other big companies developing mobile phones. American engineers – you never if they will be laid off or company will go out of business (like Motorola or Xerox).

        BTW Japanese autonomous vehicles will be very clean. Not so sure about Koreans.

  • avatar
    Big Al from Oz

    I’m not a fan of Tesla. Tesla auto manufacturing will fail. Producing a vehicle is not like producing software, where you just add a line or two to fix a glitch.

    This is why Tesla is having issues. Also, I believe Musk is incapable of understanding the changes required to turn Tesla around. He needs to understand the difference in dynamics in controlling different size teams. There are also the politics of sub groups in any large workplace. Small teams function differently than large teams.

    For Tesla to sack such a large component of the work force in one hit highlights problems from himself down.

    Teams and groups of people are competitive, even within Tesla. Tesla must have an unhealthy competitive workplace. This is not conducive in Tesla achieving whats needed for success.

    This is the beginning of change from Tesla considering its some Silicon Valley player into a modern manufacturer.

    Tesla might fail. The 3 will be the make or break moment for Tesla. If they succeed at producing the 3, Tesla still needs to make a profit.

    Life doesn’t look viable for Tesla as a vehicle manufacturer, maybe autonomous software.

    • 0 avatar
      eyeofthetiger

      Life would be more viable if Tesla built that hyperloop vacuum tube monorail pod racer to Mars, or whatever. Building cars is just an awful business these days.

    • 0 avatar
      jalop1991

      “Life doesn’t look viable for Tesla as a vehicle manufacturer, maybe autonomous software.”

      And here’s the core of it.

      If I were Musk, my goal would be to get to a point where a huge player–GM, Amazon–buys my business for a lot of money.

      I don’t care if it’s to quash what I’ve done, or to use it as a springboard to take their own business to the next level. I would just take the money and run.

      Regardless I would recognize that I’m not GM, and that actually to compete in their world is not realistic.

      GM should buy Tesla, and make it the next Saturn. Which is exactly what would happen. The cars would start out being today’s Tesla, complete with the dealerships and service organizations. Then it would morph into the cars being nothing more than an electric Impala with some Model S body cues and a Tesla badge. Then they would shut it down completely–but by then they’d have a good handle on the technology and its requirements for being in the marketplace, and suddenly GM has an already-built roadmap to an advanced all-electric future, should they need it. Plus they’d have the SuperCharger network. That alone is worth something.

      For reference, imagine that you came across the formula for the Coca-Cola syrup. Imagine you could duplicate the Coca-Cola drink, every time, from fountain to can to 2 liter bottle. Chemically and on the palate, it’s indistinguishable from what the Coca Cola company sells and distributes and licenses. Great. Now what?

      Are you going to compete with Coca-Cola in the marketplace, just because you have a product that’s indistinguishable from to theirs?

      Now consider that Tesla isn’t in that competitive place yet. Tesla is you with a good syrup, trying to figure out how to get people to buy your stuff instead of Coca Cola based on nothing more than “it tastes the same”. Yes, their cars get you from A to B, and are full of luxury items. But the fueling system is radically different, and for many purposes is markedly inferior to the product that GM sells. So that’s already a negative.

      So GM could take Tesla and ADD it to their stable, and have an alternative for people who are already coming into their established dealer network for sales and service.

      But more importantly, GM could take a gaggle of summer interns and integrate the Tesla stuff into their VERY well established product development, manufacturing, marketing, and sales operations. For GM, this is like buying a fax machine and figuring out what desk or file cabinet to stick it onto–nothing more complicated. But for Tesla, they have to reinvent that development/manufacturing/marketing/sales/service wheel from scratch–not an easy task, as Musk can see.

      Those Model 3 reservations may be the straw that breaks Musk’s back. You can’t keep the momentum going that long in this world, especially when you’re playing in the tech world that has a 35 day cycle. He took their money, and now the shine has worn off the entire thing, and now he’s clearly struggling to deliver their vehicles.

      Over 500,000 people have put up around $1000 each for the Model 3 reservation. If this were some guy in an office on Main Street, promising investment returns, he’d be in jail by now for not delivering or returning the money.

      Can Musk return the money? Or was this a Go Fund Me to build the factory and lines and pay for the engineering, and now it’s all gone?

      Do the math. 500K reservations, add three zeros, it’s $500,000,000. Five. Hundred. Million. Dollars US.

      Yeah, the “investment” guy would be in jail. He might have used the money to build a Taj Mahal of an office, complete with a huge staff, but without his product–investment returns–getting into the hands of his customers, he’d be in jail.

      Did Musk use that US$500 million to create a very buyable business? Was that his plan all along? Did he predict, in any way, the struggles he would have to deliver product?

      Marketing is cheap, and using marketing he created a HUGE initial buzz around the 3. Did he use that marketing to create the buyable business, and leave the onus of delivering product to the buyer? Sounds very west-coast-tech BS to me.

      • 0 avatar
        Big Al From 'Murica

        “GM should buy Tesla, and make it the next Saturn.”

        Dear God please do. As the one Saturn enthusiast I believe on the planet I would LOVE this. And let’s be honest, the panel fitament on most Teslas is right up there with the plastic bodied Saturns.

        Interestingly though, would “New GM” have to purchase the brand from “Old GM”?

      • 0 avatar
        Big Al From 'Murica

        I think the problem however is you are really only getting the brand, supercharger network, and perhaps the battery manufacturing if that is part of Tesla Proper. The cars don’t really do anything revolutionary. It’s a battery electric with good range and the traditional makers have closed the range gap. If I’m an automakers I would probably scoop up the good parts of Tesla post bankruptcy if that is where you think it ends. Anyone buying prior to that will no doubt overpay.

        • 0 avatar
          JimZ

          the brand is very important. Look how underwhelming the response to the Bolt has been.

        • 0 avatar
          jalop1991

          ” If I’m an automakers I would probably scoop up the good parts of Tesla post bankruptcy if that is where you think it ends. Anyone buying prior to that will no doubt overpay.”

          You’re probably right.

          • 0 avatar
            mcs

            Most likely SpaceX would scoop it up in bankruptcy before any automakers.

          • 0 avatar
            JimZ

            “Most likely SpaceX would scoop it up in bankruptcy before any automakers.”

            Tesla is public, SpaceX is private, and Elon Musk runs both companies. You don’t think the SEC (amongst other three-letter agencies) would say “now wait just a damn minute here” if they tried that?

          • 0 avatar
            mcs

            It’s called privatization and is perfectly legal. As long as Musk wasn’t taking deliberate steps to bk the company, I don’t see a problem. The other way SpaceX could infuse Tesla with cash is some sort of massive contract to develop a mars rover. I’m sure that’s coming.

      • 0 avatar
        ttiguy

        Dude.

        You’re on crack if you think there is anything Tesla has that GM wants besides branding and perception. Everything that Tesla has, technology wise, GM, Toyota, Ford, etc. have in spades. Of them, GM especially. Its generally accepted that of all of the “traditional” carmakers, GM is the most advanced one of them all when it comes to electrification and autonomous vehicles.

        Tesla has done some great stuff to this point, haters be damned. BUT, they are now going to find out just how hard it is to be a mass production mfg. If quality was sketchy at low volumes, it’ll go in the tank in higher volumes. Especially when you’re trying to ramp up too quickly.

      • 0 avatar
        Zackman

        “GM should buy Tesla, and make it the next Saturn. Which is exactly what would happen. The cars would start out being today’s Tesla, complete with the dealerships and service organizations. Then it would morph into the cars being nothing more than an electric Impala”

        Yes! finally a great idea! Sign me up, ha ha…

      • 0 avatar
        APaGttH

        GM has zero reason to buy Tesla.

        Z-E-R-O.

        Freemont, California factory? GM jettisoned it.

        Battery technology? The Bolt has more range than an equivalent Model 3.

        Manufacturing process? Tesla is hand building an alleged mass production car.

        Logistics and distribution? Please.

        Massive tax breaks and government incentives? GM has that too.

        Patent portfolio. GM has that.

        Brand equity? In US maybe, but China is the biggest car economy in the world and in China it’s all about Buick baby.

        Makes absolutely zero sense for GM to buy Tesla.

        The one big automaker that could benefit from inhaling Tesla would be Toyota, but I genuinely believe they missed their chance when they teamed up with Tesla on the RAV4 electrics – that Toyota in the end had to about give away.

      • 0 avatar
        Null Set

        Good to see your novel is coming along well.

  • avatar
    SCE to AUX

    I’m reconsidering my Model 3 reservation.

  • avatar
    ktm

    ….it’s surprising. The supposed best and brightest don’t understand simple business decisions. The company employs 33,000 people. I work for a Fortune 200 company that employs over 50,000. My company is always a BUY on Wall Street. Stocks have gone from $40 a share 4 years ago to damn near $80 a share now. However, we go through VERPS (those in the know KNOW….those that don’t post stupid shit on TTAC) every 2 years.

    SG&A is real people. These are not factory workers; this overhead. Wall Street is EVERY public company’s ultimate boss.

  • avatar
    TW5

    The juxtaposition of this article with the earlier apology piece is a microcosm for overall societal sentiment. There is a huge divergence between what the public believes about Tesla, particularly the adoring fanboy public who still think Tesla is the only EV game in town, and the reality of Tesla’s daily struggle for survival. The savvy investors who are long TSLA are gambling mainly on gigafactory and the possibility of a lucrative buyout induced by CAFE compliance. Yet, the public is engaged in some sort of ethereal debate about progress and other nonsensical bikeshedding.

    I hope Tesla succeeds. The US will benefit economically. But the venom spit by Tesla’s proponents makes you question if emboldening another sociopathic cult is really worth the money.

    • 0 avatar
      JimZ

      let’s get one thing straight- fanboys are *Elon Musk* fans. Musk is to geeks what Tom Brady and Lebron James are to jocks. He is what his fans wish they could be.

      the Venn diagram of Tesla fans and SpaceX fans is a single circle.

  • avatar
    George B

    Sounds like Tesla was trying to have a small layoff without spooking investors, claiming that staff reductions were due to performance issues. I worked at a company that did something similar. I’ve also seen “Rank and Yank” used to keep employees quiet at a different former employer that had had rapid appreciation in stock value. Rocking the boat and getting yanked meant losing valuable unvested stock options.

  • avatar
    TheEndlessEnigma

    Sales are hurting so……shoot sales and marketing.
    Production issues abound so……shoot production employees and engineers.

    Sounds like a winning formula!

  • avatar
    dukeisduke

    I read a news article about the layoffs this past weekend. The article made it sound like it’s a normal thing at Tesla; annual performance reviews have wrapped up, and people with good reviews got raises, bonuses, and promotions, while people that received bad reviews got fired.

    • 0 avatar
      redmondjp

      But it’s completely unexpected when it’s all-hands-on-deck time as they attempt to put the Model 3 into production. They need every single body they can get right now, even if somebody was 5 minutes late a time or two.

      My hunch is that they purged all of the pro-unionization people.


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