The report is one of several that follow Tesla CEO Elon Musk announcing that he has a “super bad feeling” about the economy — a sentiment that led him to instruct Tesla executives to “pause all hiring worldwide” and say that the company needs to cut 10% of its labor force.
Tesla closed down an office in San Mateo, California, that had been focused on the electric automaker’s driver-assistance system. Roughly 200 people — more than half of staff at the facility — were laid off, according to the Journal, while some will be permitted to relocate elsewhere within the company.
“Tesla clearly is in a major cost-cutting mode,” Carnegie Mellon University engineering professor Raj Rajkumar explained to Reuters, adding that “raw material costs and supply chain problems” are troubling the company.
Indeed, Musk recently lamented that Tesla’s factories have become “gigantic money furnaces” thanks to the supply chain issues.
“Just been trying to keep the factories operating the last couple years has been a very difficult thing, like supply chain interruptions have been severe, like extremely severe,” Musk said in an interview published earlier this month. “The past two years have been an absolute nightmare of supply chain disruptions, one thing after another, and we are not out of it yet.”
In another bout of layoffs, two employees who volunteered in LGBTQ and diversity roles lost their jobs. Both had received multiple promotions in their relatively short tenures, seemingly indicating that their performance was not a cause for concern and that the layoffs could be related to Musk’s campaign against the “woke mind virus.”
Last week, former Tesla employees sued the automaker for allegedly violating federal law through its execution of widespread dismissals. According to the class action complaint from John Lynch and Daxton Hartsfield — who worked at Tesla’s Gigafactory 2 plant in Sparks, Nevada — the company violated the Worker Adjustment and Retraining Notification (WARN) Act by failing to provide 60 days of advance written notice regarding the mass layoff.
“Plaintiffs and all similarly situated employees have been damaged by Tesla’s conduct constituting violations of the WARN Act,” the lawsuit argues, “and are entitled to damages for their back pay and associated benefits for each day of the violation because Tesla has not acted in good faith nor with reasonable grounds to believe their acts and omissions were not a violation of the WARN Act.”
The closure of the San Mateo facility could also reflect Tesla’s broader transition out of California. Last year, Musk revealed that Tesla would be moving its headquarters from the Democrat-run state to a new facility near Austin, Texas. Musk had previously threatened to move Tesla’s headquarters in 2020 when COVID-19 lockdowns shuttered the company’s manufacturing facility in Fremont, California.
“It’s tough for people to afford houses, and people have to come in from far away,” Musk said at the launch of the new facility. “There’s a limit to how big you can scale in the Bay Area. In Austin, our factory is like five minutes from the airport, 15 minutes from Downtown.”