Tesla Layoffs — Let's Get Real About This

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As you’ve probably heard by now, Tesla has decided to lay off more than 10% of its workforce globally. As the news came out, because of how big it was, I figured someone would be interested in writing about it. However, no one jumped on the story. Frankly, whether you’re very pro-Tesla or not a Tesla fanboy at all, it’s a dark day for the EV revolution. I’ll get to the Tesla part of this in a moment, but from a broader view, Tesla has been the #1 corporate face and driver of the EV revolution globally. You can also put BYD up there, but its influence has been much more within China until recently, and there’s no debate that it has not had the star power of Tesla or the influence Tesla has had in Europe and North America. So, when Tesla finds itself in a tight spot and decides it needs to lay off 10% or more of its workforce, that stings for the broader EV revolution as well.

But let’s get to Tesla. What is going on at Tesla? Many Tesla fans have tried to ignore the problem or wave it away, but Tesla has been facing increasing pressure on its demand–supply balance for several quarters. Last year, Tesla started rolling out more significant incentives for Tesla buyers to trade in their Teslas and get new ones, like allowing FSD or lifetime Supercharging transfers from their existing cars to new ones. In recent months, Tesla has been peppering owners and reservation holders with more and more email and text pitches to buy another Tesla, or a first one in the case of Cybertruck reservation holders. Prices, of course, have come down a great deal. Unless you’re severely blocking out reality, you can see that Tesla has had increasing concerns about consumer demand. If it didn’t have very ambitious goals for growth, it might not have been so obvious, but when you’re targeting 50% growth year over year (YoY) and your deliveries decline YoY, something is obviously wrong.

I just wrote two days ago about Tesla demand factors — pro and con — in the coming years, and a few moments ago, I saw a comment under the article from someone saying they needed to move CleanTechnica from their “news” bookmark to their “anti-Tesla” one. Not wanting to see what is happening and not wanting to have serious discussions about the most important matters concerning the future of the company will not make the issues go away. In fact, it’s this kind of stubborn refusal to accept and look at the challenges the company is facing that has gotten Tesla to where it is. Largely, it seems that has come from the top, but not enough fans and supporters of the company have been willing to look at and address the elephants in the room. Will 10% workforce layoffs change things? Will the fact that Drew Baglino and Rohan Patel leaving the company change things?

In my opinion, Tesla has been suffering from neglect, Elon Musk has gotten too distracted by certain other things inside and outside of the company and lost focus on regularly improving Tesla vehicles in ways that will help the company to play to its strengths and grow. The ball has been dropped, ironically, through complacency and a lack of imagination. There are many ways Tesla vehicles could be improving, and they don’t all center around yet another FSD update and hype cycle. They are things that could unite people, rather than feed into counterproductive culture wars.

Additionally, Tesla was formed to make a mass-market difference. It did so. But rather than keeping that going, there’s been too much assumption that the Model 3 and Model Y can grow and grow and grow, and that Tesla didn’t need to expand its lineup quicker and more significantly on the mass-market level in order to maintain its growth level. Again, I think it’s due to distraction at the top, not enough people willing or able to affect the decisions at the top, and a failure to see what really made Tesla so successful and how to keep that going.

Maybe I’m wrong. Maybe this is a blip in the story that’s a natural part of such extreme growth and success. Maybe you just need to “trim the fat” from time to time. Maybe there’s too much noise about a short-term drop in growth. Or maybe there are too many people, and especially too many key people, unwilling to consider what is going wrong and try to create positive change. Well, inside Tesla, one in ten people who could have done so yesterday can’t do so tomorrow. There isn’t the money to pay them, since sales haven’t been growing. You can spin 100 concerning Tesla stories into “positive news,” or “pro-Tesla news,” but you really can’t spin drooping sales and massive layoffs as signs that everything is going splendidly at Tesla. You can’t spin Tesla’s core plan as perfect when robotaxis are already four years late and certainly not around the corner. Or you can, but then get ready for more surprises.