The automotive industry has long been dominated by a few select global brands with little room for expansion and more barriers to entry than anyone could count. Despite the low probability, Tesla has seen a significant amount of success in bringing new technological revolutions to the industry. However, it hasn’t happened without battles along the way.
Tesla: A Workforce Battle
Tesla has consistently found themselves in a fight between keeping their costs low and appropriately staffing their company. 2018 was a particularly impactful year for Tesla’s workforce.
In early 2018, Tesla sought to mitigate costs and restructure their internal processes which resulted in a layoff of approximately 9% of the company’s employees – an all-time record for Tesla. After groundwork had been laid for new management structures and internal manufacturing processes, the company picked back up with a hiring spree in summer of 2018.
This “hiring spree” caused the company to grow from just a few thousand workers to well over 40,000 employees by September of 2018. The increase in hiring was done in hopes to increase production, sell more cars, and finish the last quarter with higher productivity than prior quarters.
2019: Layoffs and Cost Mitigation
While Tesla’s production was higher than ever in the last quarter of 2018, the influx of workforce caused the cost-per-unit of production to skyrocket, launching the Model 3 production costs just north of $35,000 per car.
In an attempt to rebalance internal processes and lower the cost of Model 3 units, Tesla began laying off Model S and Model X workers last week. The company offered severance packages to all laid-off workers. Multiple workers reported they were given a mere 7 days to respond with their acceptance or denial of the package.
Tesla’s behavior over the last several years has left the public largely unaware of the company’s future objectives. Between the pursuit for new technological innovations and maintaining costs on current production, how Tesla will proceed with staffing and layoffs is anyone’s guess. One thing is for sure – Tesla won’t give up the battle to stay at the front of the line in automotive industry transformation from fossil fuels to electric.