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Welcome back to the Elon Musk Podcast.
This is a show where we discuss the critical crossroads that
shape SpaceX, Tesla X, The Boring Company, and Neuralink.
And I'm your host Will Walden. Tesla is continuing its severe
layoffs now into the 4th week, affecting multiple departments
within the company. Employees from software,
services and engineering divisions have been dismissed,
with the layoffs being initially reported by Electric and
Business Insider, and report surfaced of affected workers
sharing their layoffs on professional networks like
LinkedIn. Recent job cuts were executed
over the recent weekend in early Monday, according to affected
employees. However, the exact number of
affected employees remains undisclosed and Business Insider
said that at least seven employees had announced their
layoffs on Sunday alone. These layoffs are part of a
broader reduction effort that began last month, where Tesla
initially aimed to reduce its global workforce by 10%,
totaling 14,000 employees from its 140,000 strong workforce
now. This significant cut included
high level positions, notably Tesla's head of EV charging,
Rebecca Tenucci and her entire team of 500 people.
Now, Tesla CEO Elon Musk has articulated a need for a
significant reorganization of the company every five years.
In a company wide e-mail, Musk emphasized the necessity of the
layoffs, stating that employees working under executives who do
not meet the standards of excellence, necessity and
trustworthiness would be dismissed.
And Musk's motivation for the layoffs appear to be influenced
by financial concerns, as he privately expressed the desire
to reduce the company's workforce by 20%, mirroring a
decline in quarterly vehicle deliveries.
Now Tesla's financial health is showing strain, with a 55%
decrease in profits year over year amid falling sales, and the
company faces increasing competition in key markets such
as the US and China, and a global decrease in demand for
electric vehicles. And despite the company's
challenges and vehicle sales, Musk is pivoting Tesla's focus
towards autonomous vehicles. He's promised the release of a
fully autonomous Robo taxi later this year, signaling a shift in
company strategy away from the low price $25,000 budget EV.
Now following the dismissal more than 10% of Tesla's workforce,
the company has further reduced its employee base, including the
termination of senior executives and veterans such as the entire
Supercharger team. Now Tesla began this round of
layoffs by eliminating multiple teams at the Gigafactory in
Texas and reducing production shifts which included firing
significant executives connected to vinyl projects.
And among those layoffs were key personnel such as Drew Baglino,
former VP of powertrain and energy engineering, and Rohan
Patel, head of policy and business development, signifying
a major shake up within the company's leadership.
In news of these layoffs was first brought to light through
internal communications confirmed by reports in The
Information, which highlighted impending exit of Rebecca
Tanucci and nearly her entire team of 500 people.
Now Tanucci, who had played a crucial role in expanding
Tesla's Supercharger network and in negotiating the adoption of
the North American charging standard, the NAX was recognized
as a significant figure in this industry.
Her departure suggested potential shift in Tesla's
approach to its charging infrastructure strategy.
Tesla plans to continue some construction on new
Superchargers, although the overall strategy appears to be
scaling back even as the demand for faster charging solutions is
increasing. Another significant layoffs was
that of Daniel Ho, Director of Vehicle Programs, indicating
potential issues within the team responsible for new product
initiatives at a time when Tesla anticipates a slowdown in sales
growth pending the release of new vehicle models.
These layoffs occur against the backdrop of an industry wide
trend where tech companies are reducing their workforces
despite relatively high profits and Tesla's decision to cut jobs
follow similar moves by other tech giants, reflecting A
cautious or possibly reactive approach to market conditions.
Now some people like to criticize the dismantling of a
Supercharger team. The people over at Electric and
I definitely enjoy their work over there and they said that it
was a poor strategic move given the current industry dynamics
and recent milestones achieved by the team under Tenucci's
leadership. And right now I would have to
agree with them. You can tell that everybody's
going towards the NEX plug system and I don't know why they
would scale down their charging team.
If other companies are going to start using NEX unless they have
something already lined up where they can manufacture them
cheaper or they can have a different team do installations
or cover the groundwork for other companies like Ford and
other large manufacturers. I'm not sure why they laid off
the whole team. Maybe there's going to be a a
huge restructuring and they're going to make the team a little
bit more lightweight, but I don't know why they would fire
the head executive of that team. That's a weird strategy.
Now it's a, it's a very important to to think about the
people that have been laid off and if there's going to be
20,000 people being laid off, where those people are going to
go? Are they going to other tech
companies or are they going to go to other vehicle companies?
We'll see some really talented people possibly go to
competitors of Tesla, and that's OK.
We need the competition. Tesla needs the competition.
They've been to the forefront of electric vehicles forever.
And they could use some definite competition to kind of push them
around a little bit because they're the big dog and they
need some some people to show them that they're not the best,
even though currently they are. So competition breeds excellence
and we're going to see some new people in new roles in probably
some old companies. And it's going to be a very
hectic and very great time for the next, in the next few years
for the EV market. And the broader impact of these
layoffs on company morale is profound.
Think about it. If 14,000 people get laid off,
that's a huge chunk of the workforce.
You never know who's going to be next, and you know they're
facing uncertainty about their job security.
The atmosphere is exacerbated by the timing of these layoffs,
which coincides with a proposed significant payout to Tesla.
CEO Elon was supposed to get 10s of billions of dollars due to
his work that he's done with Tesla.
And since he's making so much money, sure, there's some people
that wonder why he had let so many people go and not just give
him a little chunk of that and keep him around, but I guess
that's not how you make a successful auto and AI company
like Tesla. How the ongoing Tesla layoffs
might not yet be concluded, though there could be some more
as there's speculation about further reductions in the
uncertain environment suggests more challenges ahead for the
company as it continues to navigate significant internal
restructuring and external market pressures.
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