Elon Musk’s Tesla Turnaround Plan, Explained
Massive layoffs, rescinding internship offers, a surprise visit to China…Tesla (TSLA) CEO Elon Musk has been making a series of unusual and swift moves in what increasingly looks like a turnaround plan for his once high-flying electric carmaker. Over the past three weeks, Tesla has slashed thousands of jobs and shut down multiple divisions, including its newly formed marketing team, and Musk has signaled that he isn’t done making cuts. Meanwhile, the billionaire founder is courting the Chinese government to help Tesla open up new revenue streams in , the company’s largest overseas market.
Layoffs and resignations are rattling all levels of positions at Tesla. In an email on Monday (April 29), first reported by the Information, Musk announced that two senior Tesla executives —Rebecca Tinucci, senior director for charging infrastructure, and Danile Ho, director for vehicle programs and new products, are leaving the company and that their teams will be dissolved as a result, affecting hundreds of employees. Two weeks prior, Tesla’s head of public policy and business development, Rohan Patel, announced his departure, and Musk subsequently shut down his entire team.
In the email, Musk said he would begin asking for resignation letters from Tesla executives who retain “more than three people who don’t obviously pass the excellent, necessary and trustworthy test.”
“Hopefully these actions are making it clear that we need to be absolutely hard core about headcount and cost reduction,” he wrote.
On April 14, Tesla announced plans to cut more than 10 percent of its global workforce, which would affect around 14,000 employees. This week, Tesla let go about 500 employees on its EV Supercharger team. Bloomberg has reported that Musk is targeting a 20 percent headcount reduction, citing anonymous sources familiar with his thinking.
Even lowly-paid interns are feeling the pain. Bloomberg reported yesterday (May 1) Tesla has revoked some offers of its summer internships, citing multiple would-be Tesla interns who posted on LinkedIn saying their internship offers had been rescinded. Each year, Tesla hires about 3,000 interns from colleges and universities around the world, according to the company’s 2022 Impact Report.
Tesla was one of the few Silicon Valley companies that managed to avoid major layoffs during last year’s tech slump. But like many of its Valley peers, Tesla hired aggressively during the Covid tech boom and is now dealing with the consequences. “Over the years, we have grown rapidly with multiple factories scaling around the globe. With this rapid growth there has been duplication of roles and job functions in certain areas,” Musk said in a memo announcing layoffs on April 14.
On April 23, Tesla reported the largest quarterly revenue drop in more than a decade. EV sales for the quarter ended March plunged 9 percent from the previous year. And Tesla delivered 20 percent fewer EVs in the January-March period than the previous quarter.
In the meantime, Musk is looking to tap new revenue streams in key markets. This past Sunday, he made an unexpected, one-day visit to China and got his old friend, Chinese Premier Li Qiang’s backing to roll out Tesla’s FSD driver assistance software in the country. The swift dealmaking surprised many industry observers because Tesla’s driving assistance technology had caused concerns for Chinese regulators in the past. In 2021, China banned Tesla vehicles from entering many government facilities due to security concerns over cameras installed on the cars. Those cameras were used to power Autopilot, a less advanced driver assistance program than FSD.