Report: Tesla Layoffs Commence in Earnest

Matt Posky
by Matt Posky

Tesla is undergoing layoffs, with Elon Musk confirming the loss of two senior executives and plans to reduce overhead by cutting staff. This has been relatively common within the automotive sector, with legacy manufacturers having engaged in rolling layoffs for years as a way to offset development costs and maximize profits. But Tesla has long been viewed as the vanguard of electrification and the brand most other EV manufacturers hope to embody due to its meteoric rise.

Tesla figured out how to make electrification profitable when every other automaker struggled and likewise pioneered the global charging infrastructure by making sure its proprietary Supercharger network was the best around. Unfortunately, this doesn’t appear to have saved the relevant workforce from trouble. According to Reuters, they’ll be the group seeing the brunt of the layoffs this round after an internal memo between Musk and senior managers was intercepted by the media.

From Reuters:

Rebecca Tinucci, senior director of the electric vehicle maker's Supercharger business, and Daniel Ho, head of the new vehicles program, will leave on Tuesday morning, the report said.
Musk also plans to dismiss everyone working for Tinucci and Ho, including the roughly 500 employees who work in the Supercharger group, The Information said. It was not clear how many employees worked for Ho.
Tesla's public policy team, which was led by former executive Rohan Patel, will also be dissolved, the report said.
"Hopefully these actions are making it clear that we need to be absolutely hard core about headcount and cost reduction," Musk wrote in the email, the report said. "While some on exec staff are taking this seriously, most are not yet doing so."

Tesla had previously decided to shrink its headcount of 140,400 employees by roughly 10 percent. In April, Rohan Patel and battery development chief Drew Baglino announced they would be leaving the company.

With legacy manufacturers now fielding EVs of their own Tesla has more competition than ever. But those companies likewise aren’t doing well, with signs that all-electric vehicles may have reached a period of peak saturation. While Tesla has performed better overall, it’s also losing revenue and now has to compete with brands that are heavily discounting EVs just to get them off the lot.

There’s also a sense that the government has taken a special interest in Tesla after Elon Musk openly bemoaned decisions made by the Biden administration and released evidence that federal intelligence agencies were trying to exert control over Twitter (now X) before Musk took ownership. Formerly cited as the champion of electrification and space exploration, Tesla and its CEO (who is also responsible for SpaceX and Starlink) have been the target of a staggering amount of regulatory probes since 2021.

Some of the regulatory critiques of the company seem totally valid and predate the change in leadership. For example, Tesla has been selling “full self driving” for years at quite the premium. But the system has yet to fully manifest into something truly autonomous, leading to claims of false marketing. One could argue that loads of automakers have done this. But Tesla definitely took things the furthest and the Securities and Exchange Commission seems to agree, hence the probes.

Meanwhile, federal agencies have likewise been investigating other items pertaining to claims that the CEO has misappropriated funds and that his companies engaged in discriminatory hiring practices, created environmental damage, and have demanded Musk hand over the names of journalists provided with documents pertaining to the infamous Twitter Files. The Biden administration's National Labor Relations Board has even investigated his companies on the grounds that they instituted dress codes and opposed unionization.

Tesla has also been forced to recall the latest version of Autopilot (issued via over-the-air updates) after the National Highway Traffic Safety Administration (NHTSA) decided it wasn’t sufficiently safe. However, the agency is now revisiting the matter and asking whether the recall had done enough and may recommend additional actions be taken if the updates are determined not to “remedy a defect that poses an unreasonable safety risk.”

Many, including Musk, have suggested that the sudden influx of legal actions suggests the current administration — and perhaps any allies it has in the relevant industries — have it out for him and his businesses.

Whether or not that’s true is another matter entirely. But the CEO has attributed some of the cost cutting the company is undertaking to the mounting pressure it’s been seeing from the government. Remaining lean in times of trouble is a tactic most industries engage in and it looks like Tesla is following suit — as it is indeed facing quite a bit of federal scrutiny as EV sales look to be taking a dive.

[Image: Tesla]

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Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Alan Alan on May 02, 2024

    As the established auto manufacturers become better at producing EVs I think Tesla will lay off more workers.

    In 2019 Tesla held 81% of the US EV market. 2023 it has dwindled to 54% of the US market. If this trend continues Tesla will definitely downsize more.

    There is one thing that the established auto manufacturers do better than Tesla. That is generate new models. Tesla seems unable to refresh its lineup quick enough against competition. Sort of like why did Sears go broke? Sears was the mail order king, one would think it would of been easier to transition to online sales. Sears couldn't adapt to on line shopping competitively, so Amazon killed it.

  • Alan Alan on May 02, 2024

    Where's Earnest? TX? NM? AR? Must be a new Tesla plant the Earnest plant.

  • 3-On-The-Tree I don’t think Toyotas going down.
  • ToolGuy Random thoughts (bulleted list because it should work on this page):• Carlos Tavares is a very smart individual.• I get the sense that the western hemisphere portion of Stellantis was even more messed up than he originally believed (I have no data), which is why the plan (old plan, original plan) has taken longer than expected (longer than I expected).• All the OEMs who have taken a serious look at what is happening with EVs in China have had to take a step back and reassess (oversimplification: they were thinking mostly business-as-usual with some tweaks here and there, and now realize they have bigger issues, much bigger, really big).• You (dear TTAC reader) aren't ready to hear this yet, but the EV thing is a tsunami (the thing has already done the thing, just hasn't reached you yet). I hesitate to even tell you, but it is the truth.
  • ToolGuy ¶ I have kicked around doing an engine rebuild at some point (I never have on an automobile); right now my interest level in that is pretty low, say 2/5.¶ It could be interesting to do an engine swap at some point (also haven't done that), call that 2/5 as well.¶ Building a kit car would be interesting but a big commitment, let's say 1/5 realistically.¶ Frame-up restoration, very little interest, 1/5.¶ I have repainted a vehicle (down to bare metal) and that was interesting/engaging (didn't have the right facilities, but made it work, sort of lol).¶ Taking a vehicle which I like where the ICE has given out and converting it to EV sounds engaging and appealing. Would not do it anytime soon, maybe 3 to 5 years out. Current interest level 4/5.¶ Building my own car (from scratch) would have some significant hurdles. Unless I started my own car company, which might involve other hurdles. 😉
  • Rover Sig "Value" is what people perceive as its worth. What is the worth or value of an EV somebody creates out of a used car? People value different things, but for a vehicle, people generally ascribe worth in terms of reliability, maintainability, safety, appearance and style, utility (payload, range, etc.), convenience, operating cost, projected life, support network, etc. "Value for money" means how much worth would people think it had compared to competing vehicles on the market, in other words, would it be a good deal to buy one, compared to other vehicles one could get? Consider what price you would have to ask for it, including the parts and labor you put into it, because that would affect the “for the money” part of the “value for money” calculation. An indicator of whether people think an EV-built-in-a-used-car would provide "value for money" is the current level of demand for used cars turned into EVs. Are there a lot of people looking for these on the market? Or would building one just be a hobby? Repairing an existing EV, bringing it back into spec, might create better value for the money. Although demand for EVs is reportedly down recently.
  • ToolGuy Those of you who aren't listening to the TTAC Podcast, you really don't know what you are missing.