Elon Musk sent out a memo to all Tesla staff last night.
Over the years, we have grown rapidly with multiple factories scaling around the globe. With this rapid growth there has been duplication of roles and job functions in certain areas. As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity.
As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally. There is nothing I hate more, but it must be done. This will enable us to be lean, innovative and hungry for the next growth phase cycle.
I would like to thank everyone who is departing Tesla for their hard work over the years. I’m deeply grateful for your many contributions to our mission and we wish you well in your future opportunities. It is very difficult to say goodbye.
For those remaining, I would like to thank you in advance for the difficult job that remains ahead. We are developing some of the most revolutionary technologies in auto, energy and artificial intelligence. As we prepare the company for the next phase of growth, your resolve will make a huge difference in getting us there.
This would be about $1-1.4 billion in reduced salary if the 14,000 global staff were making $70,000-100,000 per year. There will be costs for the layoffs in Q2 but the reduced costs would increase margin by about 4-6% starting in Q3 if revenue and revenue growth are not negatively impacted.
The last major Tesla layoff was in June, 2022. Tesla reduced its US salaried workforce by roughly 10% over the next three months. This was ahead of an anticipated recession. There was a hiring freeze as well but hiring restarted a few months later.
Tesla is clearly facing a challenging transition.
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The problem is Tesla still makes expensive electric cars, which not everyone can afford. Elon Musk wants an AI factory that build AI factories. The development of AI requires an abundance of cheap electricity, hardware and data. Consumers still need sufficient income to buy that hardware and software to generate data for the AI. So it is a chicken and egg problem.
Elon Musk shouldn’t forget that factories are just a part of communities and should provide sufficient income, affordable products and services that communities need. And communities need affordable electricity, water, houses, food, transportation, health-care, education and jobs from clean renewable resources. A factory cannot survive if these products and services are too expensive and/or not wanted or toxic. How about communities building communities that are self-sufficient in their basic needs with clean renewable resources.
For example the main problem of peak and low renewable energy-production with solar and wind is cheap electrical storage with little maintenance and a long life-cycle. This can be solved with cryogenic compresses air, membraneless flow and sodium-ion batteries using locally abundant non-toxic resources like bromine, zinc, natrium and/or iron. These energy storage systems can be locally produced and recycled while the production and recycling process don’t have to be complicated without using expensive and often toxic resources.
My idea is to integrate a membraneless flow or sodium battery container with solar-cells on top, foldable solar-panels (inside or on every side of the container), TEG (Thermal Electric Generators), Starlink connection and (fast-)chargers for electric cars, mobile, laptops, etc… . These battery containers with integrated foldable solar-panels, TEG’s and fast-chargers could charge electric autonomous trucks on the go while these battery containers are autonomously transported and parked to the right location by these electric trucks, which are still monitored and/or driven by humans from a distance. This would lower the costs, time and land surface needed to install solar panels and other kinds of non-mechanic electric generation. Instead of installing solar panels and electrical storage systems in each individual house a whole community, factory or server could be connected for energy and information at once with these integrated solar batteries. During maintenance and repair these battery container could still function if it is made out of multiple modular parts. These integrated solar batteries would have multiple functions:
electricity production
Foldable solar-panels, thermal electric generators, piezoelectricity or other kinds of generators, which can produce electricity 24 hours per day. Tesla and SpaceX could then also do research together in more efficient solar-cells (multi-junction and Freznell lens technology) and other kinds of non-mechanic electric generation both on earth and in space. Also solar light and shade in space is a possibilty: power generation, distribution and prevention of extreme temperature differences.
large-scale electricity storage
(fast-) charging stations
wireless internet connection
gathering data for weather forecasts (temperature, wind, moist, etc… ), earthquakes, etc…
If electric solar cell cars (and airplanes) like Aptera, Lightyear and Sono Sion could also use other kinds of non-mechanic electric generation to blur the distinction between the production-process and product, because every product would also become an electric production and storage unit, while their range could significantly increase with less batteries depending on aerodynamics, weight (materials), improvement of batteries, drive-train, solar-cell technology and other kinds of non-mechanic electricity generation. If Elon Musk doesn’t have the creativity, time and energy he could help other developers of these vehicles with investments, product development, production processes and software. This could automatically increase the electric infrastructure and Tesla wouldn’t have to invent the wheel twice for the most efficient aerodynamic lightweight solar-cell car, truck or airplane while Tesla can then focus more on the development of software, servers and AI like FSD (Full Self Driving) and other kinds of services like digital payments, internet and insurance subscriptions . Tesla could become its own largest producer and consumer of solar cells, thermal electric, piezoelectric generators (including sensors) and electrical storage by using that electricity to power its communities, servers, factories and the development of AI.
Abundant amount of cheap electricity production and storage, automation and AI could significantly lower the costs of
education and health-care. Every pupil and student could have its own AI mentor with e-learning. The diet, sleep, exercise, food-supplements, medicine and treatment could be specified on someone’s DNA profile, age and physical and mental situation (weight, sick, wounded, etc… ). AI could help
water purification and growing food (automated 3D farming on land and in sea)
building houses with local materials like rammed earth, compressed wood and cellulose.
Rammed earth for example is dirt cheap, but requires a lot of effort. Electrification of automated 3D prefab technology and boring machines could decrease time and costs. The cavities and tunnels in the ground of houses could be used as pantries and shelters while the surplus earth could be used as rammed earth construction material. Mobile factories, integrated solar battery containers and solar-cell trucks could move to the location where the production is needed and where resources are abundant.
It would be a self-perpetuating process of self-sufficient communities building self-sufficient communities.
We should never forget AI was and is never meant to replace human consciousness, but is meant for our own survival, prosperity and wellbeing. AI for example could also improve the human genetic genome like our health, intelligence and remove the “fight” genes, which occurs more frequently in serial killers. Even if AI would take over most of our jobs humans would still need to monitor and adjust the input, output and development of AI, which would create jobs in itself. For example autonomous trucks, airplanes and ships would still need human supervision and intervention if necessary whether from inside these autonomous vehicles or from a distance with non-invasive BCI (Brain Computer Interface) as an option. AI and humans can function as a fail safe for each others development if these improvements are beneficial and benevolent in general, which can deepen our understanding of true knowledge and allow us to have a true humane existence with everyone and everything: don’t harm oneself, others and our environment.
The EV market will hit a ceiling while you can´t charge a car in less than 5 minutes at a “EV Station”. In many cities, globally, density makes it impossible to have charging stations for all cars, and much less for you to have solar panels for every car to get “free fuel”. The extra cost of EVs can´t be recovered by using solar power.
The term “headcount” is executive management’s way of dehumanizing their co-workers.
That’s what farmers learn soon: don’t let the kids name the livestock or there will be tears.
Tesla’s sales have dropped 20% in q1 ’24 and there appears to be a global ‘EV winter’ starting so downsizing is inevitable and essential, and this is likely to only be the start. Tesla have to reduce costs to stay profitable.
WIth CATL and other chinese manufacturers producing batteries for <$60/kWh now the Cybertruck battery should be revamped with much greater capacity, say 200 rather than 123kWh which would lift its desirability greatly, Sandy Munro showed there was a lot of unused volume in the existing Cybertruck battery pack.
More to add. I feel very sad for the people who’ve been working their rears off and doing their best work, yet in the end, to be treated as disposable items, but the people responsible will of course stay employed in leadership and the board. I feel like Tesla could greatly increase their outlook (and reputation) if they simply just laid off one person.
Hell no, I (as a shareholder) want Musk to remain at Tesla.
I’m not opposed to a new CEO, Musk can be CTO. I was hoping him & Andrew would swap spots…but with him now “retiring”, that’s likely never going to happen.
Tesla made me dreaming about electric cars but not anymore… I wil get an electric bmw
Sounding more like Twitter every day.
Layoffs of knowledgeable employees who made the business possible? Check
Bad taste in the mouths of buying public through bad PR and press. Check.
Another delayed or cancelled project…not encouraging for future buyers. Check.
They dug their own hole, now show some of that vaunted self responsibility thing and put the blame where it belongs.
Rats leave a sinking ship.
If Tesla is sinking then pretty much all legacy auto has been declared dead. Frankly, this is standard Elon processes as he wants to ensure that the lessor performing not be part of those small highly performing work teams. The added positive is that negative viewed people are no longer dragging down the team with negative comments and non productive work.
By reading some of the comments, one gets the impression that Tesla, at the hiring interviews, was somehow forced, by who knows who for an unknown reason, to hire one of ten people just to slack and now, finally, they have to get rid of them. This is crazy! If is someone underperforming there, “lessor performing”, it’s no other then Tesla top management itself, starting with Elon.
Pruning employees is hard but necessary.
This SHOULD be done to public employees, deadwood is huge there.
To those that got cut, “Nothing personal, this was just business”.
Musk is running Telsa as lean as possible, without sacrificing future growth.
Stock holders SHOULD be rejoicing at this move from management, BUT since most companies run fat and ONLY cut when they they are dying, this move will be misunderstood as a sign that Tesla is doing bad.
Expect the stock price to fall.
Your conclusions, all of them, are in error.
Well, the stock is down ~40% since its high last July and will probably continue to fall through this July, if not longer.
China has been doing what they do best; partnering&spying on Tesla for years. Now they are rolling out cheaper EVs, taking over the low to mid-range market (the latter is just starting). Tesla is falling behind in battery technology to CATL and others. Meeting American car body crash test standards means it will always cost more to make cars for the American market than the markets China is addressing; some of that is deliberate by auto manufactures, having little to do with actual safety, and more to monopolization, which the Biden Administration is happy to continue.
Tesla risks losing market share world-wide.
These won’t be the last labor cuts, but that won’t regain market share and profitability.
It’s going to be a long haul.
Partly good, because they get rid of less able workforce, but not so moral on the other side. They have problems with Cybertruck. I think production is still at only about 50k a year. That is little considering the timelines. I think their problem are the batteries. They thought dry coating (Maxwell) will give them an edge and that they would lower the cost of batteries a lot. I don’t know if there are just rumors, but they most likely have persistent battery production problems and large ramp isn’t happening. They need good batteries for new models,… A lots of companies burned up on next gen batteries. Looks great in labs but when needed to be scaled up some problems persist. I can’t explain the slow progression with Cybertruck and semi any other than battery issues.