Report: Tesla Layoffs Commence in Earnest

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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