Tesla’s Layoffs a Cost-Saving Measure, Laid-Off Employees Say

Tesla's Layoffs

Tesla Inc (NASDAQ:TSLA) laid off hundreds of employees in what the company maintains was a move based on performance, but the newly culled workers are claiming that the move was instead a cost-savings measure.

Tesla laid off 400 to 700 employees over the past week, with the number now potentially higher than 700. The job cuts amount to about a two-percent reduction of the Tesla workforce.

The company initially claimed that the cuts were made due to performance reviews, but many of the employees who got the ax are claiming that the move was instead a way for the electric vehicle company to cut costs. Employees, speaking under promise of anonymity with CNBC, said that their past performance reviews were high and that there was no discussion before the mass layoffs.

Furthermore, some have mentioned that the jobs targeted to be cut were among some of the highest paid positions. The cuts have all stemmed from the motors side of the business so far, raising questions on whether these cuts are a result of the “Model 3” production.


The Model 3 is Tesla’s first mass-consumer car, which the company is planning to release in 2018. The anticipation of the Model 3’s release has supercharged Tesla’s stock in 2017 and pushed the market cap above legacy competitors. Some Tesla skeptics don’t believe that the company can deliver the number of models it’s promising or for the price it has them listed at.

Others are concerned that the mass cuts may have something to do with the Model 3 production, which would harm Tesla going forward.

Tesla reiterated in a statement that the cuts were not cost-related:

“Like all companies, Tesla conducts an annual performance review during which a manager and employee discuss the results that were achieved, as well as how those results were achieved, during the performance period. This includes both constructive feedback and recognition of top performers with additional compensation and equity awards, as well as promotions in many cases. As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures. Tesla is continuing to grow and hire new employees around the world.”

Tesla also maintains one of the stricter confidentiality policies around. Employees sign contracts limiting what they can say about the projects they worked on and the conditions. Those agreements are currently being challenged by employees in arbitration.



Tesla employees detail how they were fired, claim dismissals were not performance related,” CNBC, October 17, 2017.