Last week, Tesla revealed plans to reduce its workforce by approximately 2,700 employees in Austin, Texas, and over 3,300 employees in California. The layoffs are part of a broader restructuring effort by the electric vehicle maker, which was disclosed in Worker Adjustment and Retraining Notification (WARN) Act letters filed in both states.
Tesla CEO Elon Musk, who recently relocated the company’s corporate headquarters from Palo Alto, California, to Austin, stated in an internal memo the necessity of cutting more than 10% of the global headcount due to declining sales and increased competition.
As Tesla strives to optimize costs and enhance productivity, the recent WARN notices indicate that 285 positions are being eliminated at a factory in Buffalo, New York. Despite these layoffs, as of December 2023, Tesla still employed a total of 140,473 people, according to filings.
The opening of Tesla’s Texas EV and battery factory in April 2022 marked a significant milestone for the company. The site, which Musk dubbed a “gigantic money furnace,” now produces Model Y crossover utility vehicles and is the hub for Cybertruck production. With substantial investments in its Austin facilities, Tesla is committed to expanding its operations and capabilities in the region.
Noteworthy details from the WARN filings in Texas highlighted that the affected employees were not unionized and did not possess bumping rights, emphasizing the scale and impact of the workforce reductions.
The job cuts in California spanned across various locations, including Fremont, where Tesla’s first U.S. vehicle assembly plant is situated, and Palo Alto, which houses the company’s engineering headquarters. Additionally, Burbank and Lathrop saw reductions in staff numbers, impacting Tesla’s spare parts manufacturing and Megapack assembly operations.
With expectations for company executives to address the restructuring during Tesla’s upcoming quarterly earnings call, the workforce reductions signal a strategic shift as the company navigates evolving market dynamics and intensifying competition.
