Tesla has outperformed established automakers the last several years, expanding production and deliveries at a blistering pace as much of the rest of the industry struggled with lockdowns and supply shortages. The mass firing now being carried out at the behest of Elon Musk suggests this strong run of execution has come to an end, and could complicate efforts to get back on track.
We’ll find out roughly a week from now how many electric vehicles Tesla built and handed over to customers this quarter. There was little the company could do, of course, about Shanghai shutting down the city for weeks and costing the carmaker output from its most productive plant. Musk’s words and actions lately do not inspire much confidence in how the company has coped.
First, the chief executive officer gave an interview to the Tesla Owners of Silicon Valley on May 31 (though the fan club only just aired the footage this week). Musk described the new factories opened recently near Berlin and in Austin, Texas, as “gigantic money furnaces” losing billions of dollars.
Days later, Reuters reported Musk had sent an email to Tesla executives saying he wanted to dismiss 10% of employees. He then wrote in an all-staff email that cut would only apply to salaried workers. Then he tweeted Tesla’s overall headcount will increase over the next year.
Finally, Musk told Bloomberg News Editor-in-Chief John Micklethwait this week that the salaried job cuts would take place over roughly three months. He also downplayed the significance of a lawsuit by former employees who claimed Tesla violated federal law by failing to provide advance notice of the job cuts, calling it “trivial.”
Some already affected have taken to LinkedIn to share that they were let go after having been brought on very recently. A recruiter who had been with Tesla just two weeks deemed his dismissal a gut punch. A former intern wrote that the carmaker rescinded a full-time offer he’d accepted over another job opportunity. In seeming contradiction to Musk’s company-wide memo, some hourly workers also have been shown the door.
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This is all reminiscent of the days when Tesla was hiring rapidly around the start of Model 3 production, only to announce it would fire 9% of employees in June 2018, followed by a 7% reduction in January 2019. When Musk communicated yet another round of cuts the following month and a plan to close many of Tesla’s stores, then called off the retail strategy change in a matter of weeks, one analyst described the episode as “amateur hour.”
Tesla eventually navigated its way out of that mess and may well bounce back again. But the clumsy way Musk handled this latest round of layoffs will have ripple effects: on the lives of employees let go and those who remain. Job cuts are always a horrible process, but steps could have been taken in this case to make it less painful for all involved.
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