Tesla fired hundreds of its workers earlier this week, including factory workers, engineers, and managers, even as the company is struggling amid the crucial stages of the ramp-up of Model 3 production.
Does the firing mean that Tesla is in trouble, and should Model 3 customers start to expect massive delays for the arrival of their preordered electric sedans?
Tesla Fires Hundreds Of Workers, But No Layoffs
Earlier this month, reports revealed that Tesla was only able to produce only 260 units of the Model 3 electric sedan in the third quarter. The low number was said to be caused by bottlenecks in production, but Tesla expressed confidence that it will be able to get Model 3 production back on track to about 5,000 units per week.
Knowing this, the news of the firing of hundreds of Tesla workers comes at an interesting time. Tesla, however, said that the dismissals were not layoffs, but rather the results of an annual review conducted across the company.
A Tesla spokesman said that for the performance reviews, some workers received bonuses and promotions, but some workers were also let go. The company, however, will look to hire replacements for most of the fired employees, which means that it is not downscaling its operations.
According to Mercury News, which was the first to report the dismissals, fired workers received little to no warning, with the total number of affected employees numbering about 400 to 700. A spokesman for Tesla said that most of the dismissed workers were in administrative and sales positions, and that the moves mostly boosted worker morale as high-performing employees were rewarded. However, anonymous sources told Mercury News that the firings lowered morale across many departments.
Tesla Still In Trouble
Tesla has gone all-in on the Model 3, making moves such as targeting to raise $1.5 billion to support the electric sedan's production. Tesla released the first batch of Model 3 vehicles to the first 30 customers in July, but the manufacturing process for the electric sedan has apparently not developed as smoothly as the company would have wanted it to.
The decision to fire what appear to be low-performing workers and the likely plan to replace them with high-performing ones may be part of Tesla's plans to improve the ramp-up of Model 3 production. However, the company has a long way to go before it addresses the massive waiting list of 450,000 customers, so Tesla will likely have to do more than this.