FREMONT — Tesla is slashing more than 2,700 Bay Area jobs, including major layoffs at the company’s electric vehicle factory in Fremont.
The staffing reductions at the Austin-based electric car maker — which has its engineering headquarters in Palo Alto — represent the largest single round of job cuts by a tech company since the tech sector began its current series of Bay Area layoffs in 2022.
The cuts come as Tesla is mired in a slump that is affecting electric vehicle makers worldwide. They also hit as CEO Elon Musk, one of the richest men in the world, faces increasing scrutiny for his controversial and provocative views on U.S. election integrity, White supremacy and more.
“The electric vehicle adoption rate globally is under pressure,” Musk said during a recent earnings call with Wall Street analysts regarding Tesla’s first-quarter financial results. “A lot of other auto manufacturers are pulling back on electric vehicles and pursuing plug-in hybrids instead.”
Tesla will chop a total of 2,753 jobs in the Bay Area, according to official WARN notices the company sent to the state Employment Development Department (EDD). An estimated 1,452 of the layoffs are slated to occur at an address that corresponds to the site of the Fremont vehicle factory, one of the WARN letters shows. Layoffs are also planned at multiple other locations in Fremont and Palo Alto, the filings with the state indicate.
None of the layoffs affected unionized workers, according to the WARN notices. The job cuts were all described by Tesla as permanent.
The company didn’t respond to a request for comment about the situation.
Here is where Tesla is cutting jobs in the Bay Area:
— Fremont, 2,267 layoffs. These include staffing reductions at Tesla facilities on Fremont Boulevard, Kato Road, Warm Springs Road and Page Avenue.
— Palo Alto, 486 job cuts. These include layoffs at Tesla sites on Page Mill Road, Hanover Street, El Camino Real and at the Stanford Shopping Center.
All told, Tesla has reported plans to jettison more than 3,000 Bay Area jobs since 2022. The company is not the only one in the tech sector to make significant cuts in recent years.
In December 2022, Facebook app owner Meta Platforms revealed plans to chop 2,564 jobs in the Bay Area, primarily in Menlo Park. And in January 2023, Google disclosed plans to slash 1,629 jobs in the Bay Area, mainly in Mountain View.
In addition to the Bay Area staffing reductions, Tesla is also cutting 515 jobs in Lathrop, in San Joaquin County, and 64 positions in Burbank, in Los Angeles County.
The staffing reductions are all scheduled to occur over a two-week period beginning on June 14, according to the WARN letters.
Tesla’s profits and revenue have weakened recently. Over the one-year period that ended in March, Tesla collected $13.61 billion in profits and produced $94.75 billion in revenue. During the 2023 calendar year, Tesla captured just under $15 billion in profits and generated $96.77 billion in revenue.
During the conference call, Tesla executives at one point described the company as a tree and at another point as an evolving organism, saying the time had arrived for Tesla to conduct job cuts.
“We’re basically going through that exercise wherein we’re like, hey, how do we set this company right for the next phase of growth,” Vaibhav Taneja, Tesla’s chief financial officer, told analysts. “The way to think about it is any tree which grows — it needs pruning. This is the pruning exercise that we went through.”
Musk said in a somewhat rambling comment Tesla needed to trim staffing levels and refocus.
“It is time to reorganize the company for the next phase of growth and you really need to reorganize it, just like a human, when we start off with one cell and kind of zygote, kind of blastocyst and you start growing arms and legs and briefly, you have a tail,” Musk said.
To which Piper Sandler analyst Alex Potter interjected, “But you shed the tail.”
“You shed the tail, hopefully,” Musk responded. “A company is kind of like a creature growing. And if you don’t reorganize it for different phases of growth, it will fail. You can’t have the same organizational structure if you’re 10 cells versus 100 versus 1 million versus 1 billion versus 1 trillion.”
The cuts came after Tesla’s first-quarter earnings dismayed analysts.
“Clearly Tesla is going through a challenging period of delivery growth and this story will not turnaround overnight so patience is required,” Daniel Ives, an analyst with Wedbush, wrote in a research note for investors in the wake of the earnings call.
