The inside story of Tesla's layoffs was exposed: executives hesitated to lay off employees against Musk, and all members of the 500-person supercharging team were laid off

Love Fan'er

2024-05-16 15:44Posted on the official account of Guangdong Aifaner

Editor's brief: Tesla founder Elon Musk laid off Rebecca Tinucci, the head of Tesla's Supercharging team, and Daniel Ho, the head of new products, as well as their entire team, overnight after returning to the United States from a trip to China.

The layoffs reportedly involved about 500 employees. This decision came as a surprise to the industry, as supercharging has always been Tesla's "signature business".

But dramatically, the layoffs soon took a turn for the worse. According to Bloomberg, a few days after the layoffs, Tesla unilaterally rehired some of the employees of the supercharging team who had been laid off.

Tesla's Superchargers are facing increasing competitive pressure in Europe and the United States, and their profitability has not met the company's expectations. According to industry analysts, this may involve multiple factors such as slower than expected technological progress, fierce market competition, and difficulty in making profits.

In the highly competitive electric vehicle market, Tesla's every step touches the nerves of the industry. As the soul of the company, every decision Musk makes will greatly affect Tesla's future direction.

Recently, Reuters provided a detailed report on the ins and outs behind the scenes. Here are some excerpts from our report:

Surprisingly mass layoffs: Previously, in support of Musk's layoff plan, Tesla's charging chief Tinucci laid off 15% – 20% of his staff on his team. Tinucci then reported to Musk, but because Musk was dissatisfied with his report, he then demanded further layoffs, which eventually led to the dismissal of Tinucci and the entire team of 500 people. Internal and external impact on Tesla: Tesla's Supercharger network accounts for more than 60% of high-speed charging stations in the United States, which is also a significant factor in the growth of Tesla's electric vehicle sales. This abrupt layoff has led to disruption in ongoing projects and relationships with suppliers and utility companies. Former employees said the layoffs and ensuing turmoil could undermine Tesla's ability to maintain a competitive edge in the EV market. Supplier and contractor concerns: Following layoffs, Tesla instructed suppliers and contractors to suspend new projects and material purchases. The energy team that took over the Supercharger project struggled to cope with the additional workload. Many suppliers and contractors have already invested heavily in infrastructure and are now uncertain about future collaborations. Scaled back expansion plans: Despite Musk's social media pledge to continue expanding the Supercharger network, the $500 million investment planned for 2024 is actually significantly smaller than the previous plan. This budget cut is expected to significantly slow the deployment of new charging stations, impacting Tesla's ability to meet the needs of EV users.

Four former employees of Tesla's Supercharge Network told Reuters that in the last month, Elon Musk laid off almost all employees in Tesla's EV charging division. Just the day before, Rebecca Tinucci, the head of the charging business, had met with Musk to discuss the future of the supercharging network.

In the previous two weeks, Tinucci had laid off 15 to 20 percent of his team's workforce. These employees once believed that Musk would definitely expand the supercharging network on a large scale.

However, the end result was very disappointing for these employees. Employees said Musk was unhappy with Tinucci's report, and he asked Tinucci to make further layoffs. When Tinucci said that larger layoffs would undermine the foundations of the charging business, Musk responded by firing her and her entire team of 500 people.

▲ At Tesla's Investor Day 2023, Rebecca Tinucci (Rebecca Tinucci), then-CFO Zach and Musk were on stage together. Image source: Tesla Live

According to federal statistics, Tesla Superchargers account for more than 60% of high-speed chargers in the U.S., and Tesla is by far the biggest winner of $5 billion in federal funding for new chargers.

The Reuters report, the most detailed description of the Supercharger layoffs and their impact to date, was based on interviews with eight former charging department employees, a contractor and emails sent by Tesla to outside suppliers. Only Musk and Tinucci attended the meeting described by Reuters, with four people familiar with the matter relaying what they heard from the Supercharger department manager.

Tesla officials, Musk and Tinucci did not respond to Reuters' requests for comment.

Despite the mass firings, Musk took to social media to promise to continue to expand the supercharging network. But three former charging team employees told Reuters that they had been taking calls from suppliers, contractors and power companies, some of which had spent millions of dollars on equipment and infrastructure to help build Tesla's network.

▲ Tesla's U.S. supercharging network map. Image courtesy of Not a Tesla App

Earlier this month, Tesla's global supply manager sent a letter to contractors and suppliers at Superchargers, instructing them to "hold off on groundbreaking any newly acquired construction projects" and stop purchasing materials, according to a copy accessed by Reuters. "I understand that this period of change can be extremely challenging, and it is not easy to be patient while expecting a reward," the letter said.

Tesla's energy team, which sells solar and battery storage products for homes and businesses, was tasked with taking over Superchargers and contacting some partners to close ongoing charging station construction projects, three former Tesla employees said.

▲ Tesla Supercharger. Image source: Tesla's official website

A construction contractor said that Tesla employees who contacted him "didn't know anything about the situation" since the Tesla layoffs. The contractor had expected the Supercharger project to account for about 20% of revenue in 2024, but now they plan to diversify their operations to avoid relying on Tesla.

Tinucci is one of the few female executives at Tesla. Since the departure of Drew Baglino, head of batteries and energy, Tinucci has begun reporting directly to Musk, according to four former Supercharger team employees. Baglino has historically been responsible for overseeing the charging sector, while Musk has been less involved.

▲ Drew Baglino, Tesla's former head of batteries and energy, and Musk. Image source: Tesla Live

The layoffs on the Supercharger team mark the latest in a tumultuous year for Tesla, with Musk shutting down or postponing a number of core projects that were meant to drive the rapid growth of electric vehicle sales expected by investors. Instead, Musk has now said that Tesla will shift its main focus to self-driving cars, a highly competitive and risky business that could take years to develop.

Amid fierce competition from Chinese EV makers and lower global demand for EVs, Tesla's first-quarter car sales fell for the first time since 2020.

According to a Reuters report in April, Tesla canceled plans for the Model 2, a highly anticipated budget car. This makes Tesla's plans for new factories in Mexico and India uncertain. Musk was originally scheduled to travel to India last month to meet with Indian Prime Minister Narendra Modi, but Musk canceled the trip at the last minute. At the same time, a number of senior executives left the company in the midst of mass layoffs.

Reduced overcharge network size

Two former Tesla employees said the energy team assigned to take over the supercharging network had similar responsibilities in terms of design and construction. But they say charging projects are fundamentally different because they are located in public places, which requires extensive negotiations with utility companies, local governments and landowners.

Two former Supercharger Network employees said the energy team was already struggling to cope with the current workload. However, at the time of the layoffs on April 30, Musk posted that the company "still plans to expand the Supercharger network, just at a slower pace." On Friday, Musk posted that "Tesla will spend more than $500 million this year to expand our Supercharger network and add thousands of new charging stations."

Two former supercharge employees said the $500 million expansion budget is a significant reduction from the team's original plan for 2024, and it remains a challenge that requires hundreds of employees to work together. According to an analysis provided by San Francisco research firm EVAdoption, this year's $500 million investment means that Tesla will build 77% fewer charging stations per month in the U.S. than in April.

▲ Tesla Supercharger. Image source: Tesla's official website

"Throw off the baggage"

In 2012, Tesla launched its first Supercharger in California, and Musk called the supercharging network a "game-changer" for electric vehicles, bringing long-distance travel and convenience to a level "comparable to gasoline cars."

The EV charging business requires a large upfront investment, which analysts often consider unprofitable. But according to four former Tesla employees familiar with the division's financial performance, Tesla's network was profitable until the layoffs.

This is thanks to Tesla's cost control and in-depth analysis of site selection, which allows Tesla to choose locations that attract business throughout the day, rather than just during peak demand periods when electricity bills are soaring. A former Supercharger employee said Tesla's cost per charging port is typically at least 50% lower than its competitors.

Just last month, a securities filing from Tesla said that Tesla needs to expand its supercharging network to "ensure adequate charging services for customers," especially after Ford, General Motors, Toyota and Hyundai announced they would make their cars compatible with Tesla's charging interfaces.

▲ Ford uses Tesla charging piles for charging. Image source: Ford's official website

Another former employee said that the expansion of the supercharging network was "completely in trouble" because there were not enough new charging stations coming online, and that the company had only just begun to implement upgrades to be compatible with cars from other manufacturers.

Three other former Tesla employees said the layoffs were a major setback to the expansion of the U.S. charging network, as it led to the destruction of Tesla employees' relationships with suppliers and utilities. Tesla has become one of the main customers of many large U.S. utilities, many of which hire new employees and plan for new infrastructure under Tesla's plans to expand its supercharging network, the former employees said.

▲ Tesla charger. Image source: Tesla's official website

Other companies may be able to fill the void, but Tesla's good relationships with utilities and other contractors will be difficult to replicate with massive charging investments, the former Tesla employees said.

"It's a shame that they have to leave their baggage behind these different projects now," said one former employee. He added: "People are very angry to see all these relationships being destroyed – and rightfully so."