SAN FRANCISCO - Tesla staff are bracing themselves for potential job cuts after managers were asked to affirm whether each of their employees’ positions is critical.
United States managers had to make the binary assessment of their deputies’ roles in recent days, according to people familiar with the matter, who asked not to be identified because the information is private. Tesla sent out the single-line query for each job after cancelling some employees’ biannual performance reviews, some of the people said.
The ask was consistent with entrepreneur Elon Musk’s emphasis on cost-cutting efforts in the midst of a marked slowdown in Tesla’s sales growth. The chief executive officer is known to take an unsparing approach with the companies he runs – in late 2022, he gave Twitter staff an ultimatum to either commit to his “hardcore” ethos or leave.
Tesla representatives didn’t immediately respond to a request for comment. The carmaker’s shares have slumped 26 per cent so far this year after doubling in 2023.
Tesla has roughly doubled its workforce since 2020, ending last year with more than 140,000 people on staff globally. The company employs about eight times as many people as it did in 2016, the year before the Model 3 sedan launched.
Headcount increased almost 10 per cent in 2023 even as Tesla made select cutbacks. In February 2023, the company terminated dozens of employees in Buffalo, New York, who labelled data for its driver-assistance system Autopilot. The carmaker denied that it had fired the workers in response to a union campaign announced that week.
Mr Musk, 52, said during Tesla’s quarterly earnings call in January 2024 that the company was “between two major growth waves” – the first springing from its introduction of the Model 3 and Y, and the next expected to come from a lower-cost vehicle aimed for late 2025.
Tesla has flagged ample spending towards that next-generation electric vehicle and other growth initiatives, budgeting more than US$10 billion (S$13.43 billion) in capital expenditures in 2024. Analysts also are expecting the company to increase spending on research and development to about US$4.5 billion.
With spending on capex and R&D rising, Tesla also warned in January 2024 that it’s approaching the limits of lowering costs on its existing lineup.
“This is a constant exercise, and we just have to chase down every penny possible,” chief financial officer Vaibhav Taneja said during the company’s Jan 24 earnings call. “We have a strong team which is hyper-focused on this.”
In a blog post on the job cuts in Buffalo around this time in 2023, Tesla said it rates employees’ performance on a scale of 1 to 5 every six months, and that it had scheduled “exits” for low performers roughly two months ahead of their reviews.
Tesla has periodically done layoffs in the past even as it continued to recruit for certain roles. The company has hundreds of job listings on its website. BLOOMBERG
