Tesla May Be Headed For Massive Layoffs As Woes Mount: Reports

By automotive-mag.com 11 Min Read

The first quarter and change of 2024 could not be more different from the same time last year for Tesla. In early 2023, it was riding high amid rapid-fire price cuts, handily outpacing new competitors in sales and leading what was supposed to be a tipping point for electric vehicle adoption. Of course, the pace of that growth slowed down later in the year, but Tesla’s own woes have just continued to accelerate—and now the company may be facing cuts to its workforce as early as this week.

That kicks off this Monday edition of Critical Materials, the only roundup of the auto industry’s top technology stories you need in your life. Also on today’s dance card: the world faces a shortage of EV techs, and Mercedes and Volkswagen square up against a renewed United Auto Workers union in the South. Let’s hit it.

30%: Tesla Cuts Soon, Maybe

I’m coming off a long-planned two-week vacation, where my InsideEVs colleagues Rob Stumpf and Suvrat Kothari kindly handled Critical Materials in my absence. Above all, I missed a lot of Tesla news: the possible death of the $25,000 EV, the unveiling of the robotaxi in August, tons more Cybertruck problems, slowing sales and the fallout of the company’s all-in bet on its so-called Full Self-Driving technology. 

We don’t really get “slow news days” around here.

And today, Electrek brings a wallop of a scoop: citing “several reports” from employees within the company, the EV and tech publication reports layoffs may be coming Tesla’s way. “Some of them are talking about layoffs as high as 20% of the workforce, which would mean tens of thousands of employees,” editor Fred Lambert writes. “The rumors come after Tesla angered some employees with delayed performance reviews and price bumps earlier this year.” 

The same memo was reportedly seen by Business Insider as well. Here’s what BI wrote: 

The company is eliminating “more than 10%” of staff globally, according to an internal memo sent by Elon Musk on Sunday, which was seen by Business Insider. The layoffs have come shortly after the carmaker posted lackluster delivery numbers.

Musk wrote in the email: “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 cycle.”

Some Tesla employees lost access to their emails and Teams by Monday, two people with knowledge of the matter said.

None of this is terribly surprising; we know Tesla had some tough Q1 results, delivering only 386,810 vehicles globally despite making nearly 50,000 more than that. And it’s starting to feel like the check is about to be due on FSD, where delivering “full autonomy” is seen as key to the company’s sky-high stock price. 

Tesla’s Q1 earnings call will be held after market close next Tuesday.

If you know anything about the reported cuts at Tesla, fear you may be impacted or have seen Musk’s memo, please get in touch. 

60%: Want Job Security? Become An EV Tech

Tesla Model S Repair

People often frame Hertz’s pullback from the EV rental game as a widespread customer rejection of electric cars. But it was deeper than that: the company took a huge hit to resale prices, a major revenue source, after all of Tesla’s price cuts, and it struggled with sky-high repair costs.

That’s partly because the world of car repair is still overwhelmingly dominated by knowledge of internal combustion vehicles. This Bloomberg story is centered around the UK, but consider it an issue everywhere: 

A dearth of mechanics trained to handle the most advanced EV fixes is helping to drive up repair costs, according to insurers and repair companies like the AA, which provides roadside assistance across the UK. Add in expenses like long wait times for replacement parts, and underwriters are opting to total cars with relatively benign damage — prematurely consigning electric models to the junk heap.

A seemingly simple crash that damages the battery or the compartment housing it “can cause a complete write-off of the vehicle,” said Marco Distefano, managing director of insurer Axa SA’s UK retail division. “Ultimately, that pushes up the price of insurance.”

Fewer than 10% of the UK’s 236,000 auto mechanics are qualified to work directly on EV batteries or their cases, according to the Institute of the Motor Industry, which provides training and certification. While many technicians can perform less-demanding tasks, the most challenging repairs require extra training, given the complexity of the circuits and risk of electrocution.

“The ante is risen quite a lot because you are dealing with no mistakes really,” Darren Naughton, an AA trainer, said during a visit in Birmingham. “It’s instant death on these systems.”

Don’t let “instant death” scare you! The world needs more EV techs and you could have some long-term job security if you make that your path. Expect more coverage of this crucial issue on InsideEVs soon. 

90%: UAW Targets Volkswagen, Mercedes-Benz In America

VW UAW

Via Etsy: https://www.etsy.com/listing/1650973812/vw-retro-uaw-sticker

Historically, the UAW has had little luck organizing the so-called “foreign” automakers in the U.S. That’s also a big reason so much of their production is in the South, where laws and political forces opposing unions are much tougher.

But this is a very different UAW lately, and a very different vibe in America. Auto workers too have been left out of wage gains despite record profits from the companies they work for, and many of them are understandably nervous about what an electric future means for their jobs. 

Soon, workers at Mercedes’ factory in Alabama and Volkswagen’s factory in Tennessee face new unionization votes. And this is news for us because both make EVs there: the EQS SUV and EQE SUV and ID.4, respectively. Here’s Automotive News on the latest: 

“Conditions are as favorable as they’ve been in my lifetime,” UAW President Shawn Fain said in an interview. “It’s a culmination of a lot of things, but I do think the times we’re in right now, obviously workers are looking for a better way.”

Upcoming elections will show whether workers agree that the UAW can provide that better way. VW employees here are voting this week, and another vote at a Mercedes-Benz plant in Alabama is expected by early May.

The two sites will be a good measuring stick; the UAW has failed twice since 2014 to organize VW’s Chattanooga workforce, and multiple attempts to unionize the Mercedes-Benz site outside Tuscaloosa, Ala., haven’t even led to a vote.

Fain is confident the UAW can break its losing streak.

“I think we’re going to win a lot,” he said. “Once you see the first domino fall, you’re going to see a lot more follow.”

Many modern labor unions, including the UAW, see reversing their decades of membership losses as Job Number One, even more crucial than improving existing contracts. Hence, the growth push. 

Understandably, both drives are hotly political already: 

Union supporters such as Meadows say the opposition’s argument mostly falls into three themes: The UAW is too cozy with Democrats, unionization could lead to layoffs or the plant’s closure, and the union is corrupt.

Some signs around the plant link the UAW to President Joe Biden, whom Fain recently endorsed, with messages like “Say no to Sleepy Joe.”

The Center for Union Facts, a nonprofit “supported by foundations, businesses, union members, and the general public,” according to its website, launched a campaign with ads and billboards that highlight unfulfilled promises from the Detroit 3 negotiations, the UAW’s “anti-Israel stance” and its “track record of corruption,” among other things.

“Auto workers have been burned by self-serving union officials in the past,” Charlyce Bozzello, the organization’s communications director, said in a statement. “Our goal is to make sure workers and the public have access to the full picture of what kinds of leadership and ideologies are driving the ‘new’ UAW.”

In a statement, Volkswagen officials said the company plans to remain “neutral” in the election; I can’t immediately find any statements from Mercedes-Benz but will update this story when I get one.

100%: Are You Still Optimistic About Tesla?

I’ve said this many times before, but I don’t think you should count Tesla out, ever. The company has a way of just hitting back hard when it’s knocked down.

But between the aging lineup, the intensifying competition, the thus-unrealized promise of FSD and Musk’s continued antics, no optimism should mask the urgency needed to get back on track here.

What’s your read on Tesla as Q2 goes on, and what needs to be done here? I’d like to see the company remember it’s, you know, a car company, and announce a small family of new models in the upcoming years. Instead, Musk’s mind is clearly on the AI race instead and unlocking autonomy with it somehow.

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