Literally hours after we reported that Tesla was firing even more people at its Fremont, California factory – layoffs that appeared to have not been included as part of a disclosed plan – the company implemented even more significant cost-cutting efforts that have already affected employee work schedules and impacted the supply of parts used to make vehicles. As CNBC reports, Tesla is sending employees home and cutting basic inventory at its Fremont factory.
The report stated that there were several new cost reduction measures launched by Tesla, but these haven’t made public.
First, the company is apparently asking employees to work remotely and keep their travel costs to a minimum.
Second, the company is telling hourly employees at its Sparks, Nevada Gigafactory, where Tesla makes batteries and drivetrains, to leave in the middle of their shifts. The company is also telling employees to take paid or unpaid time off, according to the report.
As a result, the inventory of rivets and fasteners – two main components in vehicle assembly – has reportedly been “reduced”.
The latest news follow Tesla layoffs that have impacted about 8% percent of the company’s employees over the last week, CNBC reported.
In its 2018 annual report, Tesla said it had 48,817 employees. Subtracting an estimated 9 percent for January’s layoffs brings that total down to 44,423 and subtracting another 8 percent — following Tesla’s move to close most stores — would put Tesla’s head count around 40,869 today.
This all comes after Tesla’s late February announcement that it would close many of its retail stores and convert the remaining stores to galleries, while shifting sales to an online-only model. Elon Musk said during the company’s secretive follow up conference call that he would not specify the size of the layoffs that would occur as a result of these retail stores closing. He claimed they were part of a cost-cutting effort that was put in place to help the company’s $35,000 Model 3 be cost efficient.
But what is most troubling – for investors in the $50 billion market cap company – is that this recent slate of layoffs is the third such round of layoffs over the last 12 months. This follows a 9% workforce reduction in June and a 7% cut in January. One wonders if these are all just hallmarks of a “growth story” that deserves a ridiculously premium valuation.
Most puzzling of all is that this news all follows a June 2018 e-mail, where Elon Musk claimed to employees that he would never have to initiate another round of layoffs.
“I also want to emphasize that we are making this hard decision now so that we never have to do this again,” Musk said in June; in retrospect, “never” has a slightly different meaning in “longville.”