Tesla Reviews Critical Job Roles, Raising Concerns About Potential Layoffs

Feb 07, 2024 10:52 PM EST

TESLA X INTERIOR — (Photo : PEXELS/Vladimir Srajber )

Employees at Tesla are preparing for possible layoffs as managers are tasked with confirming the criticality of each position. Staff members face assessment from their managers regarding the necessity of their roles. This inquiry follows the cancellation of biannual performance reviews, with Tesla directly querying managers about the importance of each job.

Reports: Layoffs at Tesla Predicted Coming

In recent days, managers in the United States have had to evaluate the necessity of their subordinates' positions, as per individuals familiar with the situation but opting for anonymity due to the confidentiality of the information.

The Straight Times reported that Tesla distributed a concise query for each job role following the suspension of certain employees' biannual performance evaluations, as mentioned by some sources. Thus, racing fears of layoffs at Tesla.

The Straight Times claimed that Tesla has not responded to a request for comments immediately. The shares of Tesla have decreased by 26% since the year 2024 began. This contrasted with their considerable expansion in 2023.

The automaker's workforce has roughly doubled since 2020, with over 140,000 employees globally by the end of 2023. This is equals to eight times the number of employees in 2016, before the Model 3 sedan launch.

Moreover, in a blog entry discussing the layoffs that occurred in Buffalo around the same period in 2023, Tesla outlined its performance evaluation system, wherein employees are rated on a scale from 1 to 5 every six months. It noted that terminations for underperforming employees were typically planned around two months prior to their scheduled performance reviews.

The Straight Times also shared Bloomberg's report, despite its history of periodic layoffs, Tesla has maintained ongoing recruitment efforts for specific positions. The company currently has numerous job openings listed on its website.

Despite experiencing select cutbacks, Tesla saw a nearly 10% increase in headcount in 2023. Notably, in February of that year, the company terminated numerous employees in Buffalo, New York, involved in labeling data for its Autopilot driver-assistance system. However, Tesla refuted allegations that these dismissals were related to a union campaign announced during the same week.

According to information from Seeking Alpha, this possible layoffs at Tesla aligns with its disappointing sales and delivery projections announced in conjunction with its Q4 earnings report. It also reflects Elon Musk's heightened focus on cost reduction initiatives, which intensified after the pandemic period during which Tesla was rapidly expanding its workforce.

Tesla's Employees

According to Electrek referencing Bloomberg, the company has instructed all managers to identify the "critical" members within their teams, suggesting preparations for a potential round of layoffs at Tesla, a practice the company has intermittently carried out in the past.

The company defended layoffs at Tesla in the past as necessary adjustments to counteract its rapid headcount growth. It is evident, nevertheless, that the rate of increase has lately slowed down. In 2022, there were 29,000 workers.

By 2023, there were just 12,000 workers. One instance of the allegations of a drop in employee morale at Tesla was the statement made late last year that salaried employees would not be receiving their regular stock incentive after yearly evaluations.

Furthermore, dissatisfaction among workers regarding their annual pay increases prompted Tesla to promise a compensation review, which, however, faced delays.