Some really weird stuff is going down at Tesla Motors (NASDAQ: TSLA). The company claims it needs to greatly expand its workforce, yet it just fired several hundred workers.
Tesla terminated between 400 and 700 employees after an annual review last week, The San Jose Mercury News reported. Uncharacteristically Elon Musk was nowhere to be seen after the announcement, but Tesla PR insisted the mass termination was not a layoff.
“Tesla is continuing to grow and hire new employees around the world,” a spokesman told The Mercury News. Most of those laid off were apparently in administrative and sales positions; but at least 60 assembly-line workers lost their jobs at Tesla’s factory in Freemont, California.
Why is Tesla Terminating Hundreds of Workers?
It seems like an odd time for Tesla to be getting rid of people because Musk has promised his factory will deliver 100,000 Model 3 sedans or 10,000 cars a week by next year.
There are some possible explanations for the job cuts including:
- Tesla is increasing automation and replacing workers with robots. Musk has promised highly automated production.
- Musk is responding to media reports that claim “Tesla builds the Model 3 by hand” by getting rid of workers.
- Musk is cutting administrative fat in preparation for a sale or a merger with another automaker. At least 63 people were laid off at Tesla’s head offices in Roseville, California. If there is a buyout or merger, I would rank India’s Tata Motors (NYSE: TTM), which owns Jaguar and Land Rover as the probable candidate.
- Musk is cutting staff in anticipation of outsourcing production. A possibility is that he intends to contract an automaker with excess factory capacity; such as Fiat-Chrysler (NYSE: FCAU) to build or sell the Model 3.
- It’s old-fashioned union busting. The National Labor Relations Board is scheduled to hear allegations that Tesla management and security harassed workers that handed out union leaflets at its factory in December, The San Jose Mercury Journal reported. Musk might be purging union sympathizers before the board rules.
- It’s a layoff, but Musk does not want to admit it. Tesla reported a loss of -$766.13 million on June 30, 2017.
One thing is clear here, something is very, very wrong at Tesla. Expect to hear more about this and soon. Expect a dramatic announcement from Tesla or Musk that will take a lot of fans by surprise real soon.