Tesla appears to be preparing for a round of layoffs

Tesla is seemingly preparing for a round of layoffs as it asks its manager to identify critical members of their teams.

According to a new report from Bloomberg, Tesla has asked all managers to identify “critical” members of their teams:

US managers had to make the binary assessment of their deputies’ roles in recent days, according to people familiar with the matter, who asked not to be identified because the information is private. Tesla sent out the single-line query for each job after canceling some employees’ biannual performance reviews, some of the people said.

It would indicate that Tesla is preparing for a round of layoffs – something the automaker has been known to do periodically.

Tesla has generally justified layoff rounds with hiring inefficiencies through its aggressive headcount growth, but that has slowed down over the years.

The automaker grew its headcount by 29,000 in 2022, but it grew by just 12,000 in 2023.

As we previously reported, morale at Tesla is not at its best. Late last year, Tesla told salaried employees that they won’t be getting their normal stock compensation following their annual reviews.

We also reported that Tesla workers were unsatisfied with their annual pay bump. Tesla said they would do another review of the compensation, but it was delayed.

Tesla is continuously conducting a cost-cutting effort to support its price cuts, which have been needed to maintain demand for its electric vehicles.

Electrek’s Take

Morale at Tesla has been one of my biggest concerns. Tesla’s success depends on its capacity to attract talent and retain talent. Despite some turnover and several high-profile departures, I’d argue that the company has been extremely good at doing that over the years.

But with Tesla becoming stingier with compensation, the stock being down, affecting stock options, and Elon becoming increasingly controversial, I think the situation is becoming harder.

A round of layoffs will also not help with the feeling of job security. I’m hoping for the best for Tesla employees.