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Tesla Fires Hundreds, Says Slow Production Not to Blame

By: Bridget Clerkin October 25, 2017
Tesla—the Silicon Valley carmaker—has struggled this year to hit manufacturing goals for the brand-new Model 3. The company fired 400-700 employees this month as it is attempting to ramp up production.

Hundreds of workers for electric carmaker Tesla received jolting news earlier this month when they learned they had been fired, even as demand for the company’s newest model has remained high.

Between 400 and 700 Tesla employees got pink-slipped, including those with positions ranging from factory floor workers to managers to engineers. (The number is based on employee estimates, as the company would not confirm nor comment on specific figures.)

When asked about the wide-scale dismissals, the automaker downplayed the event, saying it affected a small portion of Tesla’s 33,000 employees, and that the company was continuing to grow and hire new recruits around the world. Officials said they’re looking to fill the “vast majority” of the newly vacant positions.

The layoffs were the result of company-wide annual reviews, Tesla representatives said, although at least one employee who got let go said he had never been given a bad evaluation.

The Silicon Valley manufacturer has weathered several difficulties lately, with the production numbers on its highly touted new Model 3 proving especially disappointing. (Tesla spokespeople deny any connection between the faltering figures and its recent spate of layoffs.)

While CEO Elon Musk previously promised there would be at least 1,500 of the cars built by September, Tesla’s latest quarterly report revealed only 260 Model 3s had been manufactured so far this year. And the low turnaround isn’t for lack of demand: Tens of thousands of would-be customers were placed on a wait list for the vehicles. (The company’s announcement said  “production bottlenecks” were to blame for the backup—though a report by the Wall Street Journal describes less-than-desirable conditions at the manufacturing plant, including employees building major parts of the cars by hand.)

Tesla has also underperformed financially this year, losing out on more than $330 million in each of the year’s first two quarters.

And despite the lengthy wait list for a new Model 3, battery-powered cars are largely failing to move the masses, with 2017 numbers for all manufacturers totaling just 104,863 units sold through July and even more dismal numbers projected for the future of the technology.

For its part, Tesla has promised to start producing up to 10,000 Model 3s per week. Still, the company acknowledged a majority of the employees it recently departed with were members of the sales and administrative departments—adding another challenge for the electric carmaker to truly plug into the auto market.

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