Why Did Tesla Fire 400 Workers During Its Period Of ‘Production Hell?’

Industry News

It’s fourth down on the 10 yard line with 5 seconds left of the last game of the Super Bowl and Elon Musk just fired the kicker.

It’s because of Tesla’s save the world initiative that investors have cleared the way for the young automaker to succeed, but some have been left weary over the fact that its success has sometimes come with a side of controversy. Much of that controversy centers around the Model 3, the entry-level electric car that’s touted as the vehicle responsible for ushering the future of transportation. Just last week, it was discovered that Elon Musk’s Model 3 production claims were inconsistent with likely output according to Tesla’s own tax documents.

Now, as Reuters reports, Tesla has fired about 400 of its employees during a time that its own CEO claims labels a “production hell.” The news comes as a surprise given that a company needs all hands on deck when trying to pull off one of the larger production ramp-ups in recent memory, but both the automaker and its former employees are claiming that’s exactly what’s happened. “It’s about 400 people ranging from associates to team leaders to supervisors. We don’t know how high up it went,” said a former Tesla assembly line worker, who did not want to be identified. Tesla said the reason for the mass layoffs is a company-wide performance review that found some employees performing at unsatisfactory levels.

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However, Reuters’ source claimed that he had never been given a bad review in the past. According to Mercury News, Tesla also laid off some engineers and managers but gave some current employees promotions and bonuses. Tesla claims that the firings weren’t layoffs due to downscaling and that it hopes to fill a “vast majority” of the vacancies with new workers. Many affected workers said that the dismissals came without warning and have shunted worker morale to new lows. That could prove to be a concern to those paying attention to Tesla’s spat with factory workers. The automaker has famously been against its workers forming unions and some workers have complained of low wages and unfair labor practices.

Anti-union efforts coupled with these firings and the fact that works feel the need to remain anonymous in order to avoid repercussions makes it seem as if Tesla’s culture is one that puts its genius leaps and bounds at the expense of its workers. Tesla refutes that stance, saying the reshuffling boosts company morale because it rewards high performing employees. Regardless of how the Tesla team feels about the changes, there’s little doubt that firing at least 400 of 33,000 workers during a time that Tesla needs to be working at maximum productivity raises eyebrows, in part because it could signal that Tesla is having major problems with Model 3 production and needs to take drastic action to turn things around.

As Kelley Blue Book and Autotrader managing editor Michael Harley put it, “A major change in staff – whether dismissal or layoff – is an indication that there is an upper level movement to put the [Model 3 development] train back on the tracks.” For the sake of the other 32,600 workers, let's hope Tesla gets it right.

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