Tesla is cutting approximately 12% of its workforce at its factory in Austin, Texas, as part of a larger restructuring effort. The layoffs will impact 2,688 employees at the Travis County facility. CEO Elon Musk announced the workforce reduction in an internal memo, citing the need to reduce costs and increase productivity as the company prepares for its next phase of growth. There have been additional layoffs at a factory in Buffalo, New York, affecting 285 employees. In total, Tesla employed 140,473 people as of December, according to filings. The company opened its Texas EV and battery factory in April 2022 and Musk has referred to it as a “gigantic money furnace.”
Tesla officially opened its Texas factory with a “cyber rodeo” party, where it manufactures some of its Model Y crossover utility vehicles and is starting to build its Cybertruck. Musk has described the Austin factory, along with another one in Germany, as “gigantic money furnaces” in an interview. The company had planned to spend over $770 million on expanding facilities in Austin, including battery cell testing and manufacturing, cathode and drive unit manufacturing, and a die shop. The WARN notice filed in Texas indicated that none of the affected employees are represented by a union and do not have bumping rights, meaning more senior workers cannot replace those with less seniority.
The layoffs come as Tesla grapples with declining sales and increased competition in the electric vehicle market. Musk did not specify which departments or locations would be most impacted by the job cuts. The company executives are expected to discuss the restructuring further on the quarterly earnings call later today at 5:30 p.m. ET. The decision to reduce the workforce is part of Tesla’s strategy to streamline operations and cut costs while preparing for future growth. The company’s move of its corporate headquarters from California to Texas in 2021 reflects its broader efforts to optimize its operations and adapt to changing market conditions.
The WARN notice indicates that the job cuts at the Austin factory are a significant part of Tesla’s overall restructuring plans. The layoffs will impact a substantial number of employees and are an integral part of the company’s cost reduction and productivity enhancement efforts. Tesla’s focus on expanding its manufacturing capabilities in Austin and other locations underscores its commitment to continued growth and innovation. The company’s decision to reduce its global headcount is a strategic move aimed at improving efficiency and sustainability in the face of evolving market dynamics. Musk’s leadership and vision for Tesla will guide the company through these changes as it navigates the challenges of the electric vehicle industry.
