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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2 of 65 comments
  • 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.

  • Wjtinfwb Job cuts and EV's... is that a winning strategy? You're locked in to substantial labor expense after the UAW agreement signed a few months ago. And EV's ain't exactly flying off the shelves en masse. Get the new Charger out already, it's been teased more than the Bronco and Supra were combined. Get a real Hybrid option out for the RAM trucks and big Jeeps that consumers will buy. Consider bringing back a Gen 3 Hemi with an aluminum block, direct injection and perhaps a Hybrid option to counter the Toyota debacle and get a jump on GM. Dump the Hornet and build Dodge a version of the Jeep Compass they can actually sell. A Dodge with Alfa bones isn't compelling to either brands fans. Fix the Durango's oil cooler problems to avoid alienating police departments nationwide. Do you want every cop in the US driving an Explorer? Freshen up the Pacifica and get Chrysler a cool sedan or wagon that can create a buzz like the 300 did more than a decade ago. And fix your dealers, they are by a large jackasses. Plenty of opportunity for improvement.
  • 3-On-The-Tree True that’s the worst beat down in history.
  • Jalop1991 Tesla has made getting repairs a real headache for some owners, as the automaker hasn’t allowed them to get work done at third-party shops. That policy has led owners to seek  class-action status against the company,So, move next to the airport then complain about the noise.Got it.
  • Jalop1991 One of the most interesting parts of this situation is that Stellantis, and by extension, the Chrysler Group, is increasingly considered a foreign companyNational Lampoon, May 1981.
  • ChristianWimmer This W126 example looks very nicely maintained and very clean inside and out. Definitely owned with love and respect. I can see Bill from Curious Cars selling this thing! My father drove a second hand bare bones facelifted 1985 Mercedes 300SE W126 back in the day until the early 2000s which eventually got passed down to me. The previous owner had only paid extra for a sunroof and automatic transmission. It had black cloth seats, no A/C, manual windows, no cruise control and those ugly plastic hubcaps which were so common on 1980s Mercedes’. I drove the 300SE for about seven years and enjoyed the comfort and pretty low running costs: reliable and also relatively fuel efficient. If you drove it normally you could get it to sip 9 L / 100 km. Motor oil consumption was pretty high as it got older needing a top up with 1 L of oil every 1,500-2,000 km, but this was apparently normal on the 3.0 inline-6. A comfortable long-distance cruiser and it even “handled” pretty nicely when you attempted to drive it in a 50% sporty manner on some backroads. After the free-for-all parking lot it usually parked on got demolished and parking such a huge barge became a problem, I ended up selling it to a local classic car club which still own it to this day and display it at classic car shows. Great memories of that car. 420SE/SEL and the 560SE/SEL are nice but the thirsty motors are something of a turn off.