“I lost some really good players and 20% of my team.”
To a person who knew about the situation and said that Tesla management told workers on Monday that the recent layoffs, which affected good performers and cut some departments by 20%, were mostly because of poor financial performance.
The staff was told about the layoffs just one week before Tesla is supposed to report its earnings for the first quarter. As a result of an EV price war that has been going on for at least a year, Tesla’s profit margin has been getting smaller over the last few quarters. This is why the company is making this move. In 2023, the company shipped a record 1.81 million cars. Its profits, on the other hand, went down because Tesla kept lowering prices to get more sales and beat out the competition.
Tesla told its workers that more than 10%, or about 14,000 people, will be let go across the company’s global operations, which are based in the US, Europe, and China. Employees from all departments and levels of seniority were let go in order to cut costs and boost productivity in order to get ready for the company’s “next phase of growth,” according to a private email from CEO Elon Musk that TechCrunch saw.
Also Cut Were High Achievers
Two sources who spoke to TechCrunch on the condition of anonymity said that many of the people who were fired were high achievers. One source was shocked by how many bright workers were let go, and they said that many of them were working on projects that Tesla no longer considers important. The person wouldn’t say which projects it was about.
Sources say that more than 10% of the employees in some areas were let go after the company-wide email. One boss told TechCrunch that they were letting go of 20% of their staff.
They said, “I lost 20% of my team, including some really good players.”
The changes come at the same time that Musk keeps steering the company toward making fully autonomous cars. Tesla recently dropped plans to make a cheaper EV that would cost around $25,000. Instead, they will use the base that is being built to power a supposedly robotaxi that Musk said will be shown off on August 8.
Walter Isaacson, Musk’s biographer, says that he had tried to put the dedicated robotaxi car project at the top of his list of priorities in the past. He told his staff in 2022 that he wanted a “clean robotaxi” that didn’t have a driving wheel or pedals. In secret, Tesla’s lead designer Franz von Holzhausen and engineering VP Lars Moravy worked on the low-cost EV project and finally persuaded Musk to make both. That is, until last week, when it was reported that Musk had changed his mind.
Top Executives Quit
Drew Baglino, who was SVP of Powertrain and Energy at Tesla, and Rohan Patel, who was VP of Public Policy and Business Development, also quit the business.
Patel told TechCrunch that he was leaving Tesla on Sunday night because the company was going through “big overall changes.” Patel wouldn’t say what it was because he had been talking to Tesla users and fans on X all the time in the past few months. A message from him said, “Better for me not to speculate.” He also said, “Tesla will be stronger than ever, and change is good.”
It was time for him to leave Tesla after 18 years. He told TechCrunch, “I feel good about the impact I’ve been able to make. My leadership team is strong, the energy businesses I’m in charge of are doing well, etc.”
A research head at the London-based financial services company Leverage Shares told TechCrunch, “Baglino was in charge of powerdrives and new battery projects. There’s a sense that there isn’t a whole lot of innovation that’s sustainable at this point, which is probably why Baglino is leaving.”
Also Read: Elon Musk Says That on August 8, He Will Show Off a Tesla Robotaxi
A few months ago, Zachary Kirkhorn, Tesla’s former CFO, quit. Now, Baglino has done the same. Musk said in January on X, which used to be Twitter, that he wanted to have about 25% voting control of Tesla so that he could focus more on the company and less on his other businesses. He also wanted to help the EV maker become a star in AI and robotics.
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