We're getting more information on the ongoing layoffs at Tesla. Many employees describe the situation as Elon Musk “throwing his weight around” to secure his position in a largely absent last year.
But he comes across as a dangerous wrecking ball.
Sources familiar with the matter said Electr Musk has not been in frequent attendance at Tesla since last year and his acquisition of Twitter.
That has changed over the past few weeks.
Musk is now all over Tesla, or at least, his presence is felt everywhere at Tesla.
It started two weeks ago with the first wave of layoffs. Musk announced that Tesla would be laying off about 10% of its workforce, and used his usual excuse of growing the workforce too fast, resulting in inefficient hiring through duplicate jobs.
However, when we first heard about those plans a day ago, we heard that layoffs could be closer to 20% of the workforce.
Of course, layoffs still continue.
Tesla began another wave of layoffs this week — including the entire charging system.
now, Electr Musk is also known to have destroyed Tesla's cathode material production team in Texas.
It started earlier this month with Anthony Thurston, Senior Manager of Cathode Materials & Manufacturing at Tesla, but Electr I learned that Musk is now out of most of the team.
Sources familiar with the matter describe a difficult situation at Tesla right now. Uncertainty, confusion and frustration are the main feelings around offices.
Multiple sources confirmed rumors surrounding Tesla in the automotive engineering and design fields next.
During Tesla's earnings call last week, Musk said little more about the layoffs. During this time, he said of “restructuring” the company:
We've made some corrections along the way. But it's time to restructure the organization for the next phase of growth, and you really need to restructure it.
Analysts and Tesla fans are trying to understand the logic behind some of these moves and the firing of nearly the entire charging company, some 500 people, is difficult for most people to understand.
Musk said Tesla still plans to grow the Supercharger network but will focus on existing stations:
We reported that Tesla had already backed out of the lease for the new Supercharger stations.
Sources say Tesla will have problems continuing to grow the network without Tesla's former charging chief, Rebecca Dinucci, in the system.
In the past, Tesla has rehired people it fired after realizing it couldn't do the job without them.
This raises questions about the logic behind some layoffs and their effectiveness.
Sources familiar with the matter believe some of the layoffs have nothing to do with inefficiency or restructuring, but rather Musk throwing his weight around Tesla.
Two sources say Electr DiNucci resists Musk's pressure to fire a large percentage of his team, and the CEO decides to let the entire team make an example.
In an email to executives on Sunday, Musk wrote:
“Hopefully, these actions make it clear that we need to be absolutely tough about intervention and cost-cutting. While some of the executive staff are taking this seriously, most still aren't.”
The message is clear: fire as many people as I can ask, or you and your team are gone.
Electrek's Take
This is clearly more than hiring inefficiency and restructuring. Kasturi cleans the house. He may have serious concerns about the economy and the short-term upside in Tesla's sales, but he didn't go into that on last week's earnings call.
It may be more than that. I don't know if I fully agree with the theory that Musk is getting his leadership position at Tesla, but it's a viable theory.
As I provided earlier, a vote on his compensation package becomes a vote of confidence in the CEO.
These layoffs will prove useful to him on that front. Many leaders are gone. As every leader leaves, Musk is needed at Tesla. And it didn't hurt that all these leaders unloaded their stakes that didn't vote against him.
However, this begs the question: Is this really good for Tesla?
The Supercharger team did something incredible: build the only successful and desirable fast-charging network in North America, critical to EV adoption.
Laying off an entire team just because the leader is pushing back the number of layoffs is absurd, especially if the plan is to grow the network even more. Tesla needs to grow the network as it currently connects other automakers. Even if Tesla sees its own sales decline, the Supercharger network will need an increase in capacity.
Everyone I've talked to at Tesla says it's a complete mess. The contractors for most of the ongoing supercharger projects lost their contact with Tesla. Again, many suspect that Tesla will try to rehire some of the laid-off workers.
Tesla's hiring inefficiencies lead to layoffs and layoffs leading to new hires.
It's not a good look.
I can only get behind Musk on this if Tesla's finances are literally in the dumps. That doesn't look bad right now based on the financial statements, but it's not impossible that Tesla's internal numbers, like orders coming in, look bad.
Some of this reminds me of Tesla in 2019. Things were looking pretty good, but Tesla embarked on a massive cost-cutting drive. We later learned that Tesla was on the brink of bankruptcy because it didn't anticipate how expensive mass-launching the Model 3 would be in Europe.
The long transit times put a lot of financial pressure on Tesla, and the cost-cutting effort was intended to compensate for that — something Musk hasn't communicated with shareholders since.
Maybe something similar is happening that we don't know about, but at the same time, Tesla is now sitting on $27 billion in cash in a completely different situation.
FTC: We use auto-affiliate links that generate income. Further.
“Friend of animals everywhere. Devoted analyst. Total alcohol scholar. Infuriatingly humble food trailblazer.”