Tesla asks which jobs are critical, stoking layoff fears

Tesla workers are bracing for potential job cuts after managers were asked to affirm whether each of their employees’ positions is critical.

U.S. 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.

The ask was consistent with Elon Musk’s emphasis on cost-cutting efforts in the midst of a marked slowdown in Tesla’s sales growth. The chief executive officer is known to take an unsparing approach with the companies he runs — in late 2022, he gave Twitter staff an ultimatum to either commit to his “hardcore” ethos or leave.

Tesla representatives didn’t respond to a request for comment. The carmaker’s shares extended gains before the start of regular trading Wednesday, rising as much as 3% to $190.61. The stock has slumped 26% this year.

Tesla has roughly doubled its workforce since 2020, ending last year with more than 140,000 people on staff globally. The company employs about eight times as many people as it did in 2016, the year before the Model 3 sedan launched.

Headcount increased almost 10% last year even as Tesla made select cutbacks. In February 2023, the company terminated dozens of employees in Buffalo, New York, who labeled data for its driver-assistance system Autopilot. The carmaker denied that it had fired the workers in response to a union campaign announced that week.

Musk, 52, said during Tesla’s quarterly earnings call last month that the company was “between two major growth waves” — the first springing from its introduction of the Model 3 and Y, and the next expected to come from a lower-cost vehicle aimed for late next year.

Tesla has flagged ample spending toward that next-generation electric vehicle and other growth initiatives, budgeting more than $10 billion in capital expenditures this year. Analysts also are expecting the company to increase spending on research and development to about $4.5 billion.

With spending on capex and R&D rising, Tesla also warned last month that it’s approaching the limits of lowering costs on its existing lineup.

“This is a constant exercise, and we just have to chase down every penny possible,” Chief Financial Officer Vaibhav Taneja said during the company’s Jan. 24 earnings call. “We have a strong team which is hyper-focused on this.”

In a blog post on the job cuts in Buffalo around this time a year ago, Tesla said it rates employees’ performance on a scale of 1 to 5 every six months, and that it had scheduled “exits” for low performers roughly two months ahead of their reviews.

Tesla has periodically done layoffs in the past even as it continued to recruit for certain roles. The company has hundreds of job listings on its website.