Tesla shuts San Mateo office that had employees working on its Autopilot systems. With the closure, the company will eliminate around 200 jobs.
People familiar with the matter said that the company is focusing on cutting costs as fears of a recession loom over the American economy. The layoffs will affect employees who are tasked with labeling videos from the company’s cars in order to improve their driver assistance systems. Bloomberg reported that while 200 workers were laid off, some 350 employees were moved to another location as the electric carmaker will close down the San Mateo, California, office.
As Tesla lays off Autopilot employees, those affected include hourly and salaried staff, many of whom manually reviewed and labeled images to refine Tesla’s driver-assistance technology. The billionaire entrepreneur had previously commented on reducing the salaried workforce at Tesla.
Out of nearly 100,000 Tesla employees worldwide, 42% are based out of the United States. Two of the impacted employees told CNBC that they were expecting the layoffs as Tesla’s lease was approaching its end. They refused to identify themselves as they were not authorized to speak about the matter. One employee told the network that most of them expected to be relocated to another Tesla office and that the layoffs took them by surprise.
CNBC also obtained an audio recording of a meeting wherein a manager informs employees about Tesla laying off employees. She said that as Tesla shuts San Mateo the company tried to relocate most of them to the Palo Alto office but couldn’t and this forced them to restructure, impacting their jobs. The Tesla San Mateo employees were told that June 28 would be their last working day and they must leave their laptops and badges at their desks. They will be paid in full for the next 60 days and the severance packages will differ based on the number of years they have worked with the company. It will also give them extended access to benefits until October 31. The details of the severance package and exit will be emailed to them. Tesla closing the Silicon Valley office seems to be in line with Musk’s comments about safeguarding the company from rising inflation.
While Tesla shuts San Mateo with a few days’ notice, its Nevada employees were forced to deal with abrupt layoffs.
Musk and Recession-Secure Safety Nets
A few days back, Tesla laid off over 500 workers from its Sparks, Nevada, gigafactory. Two employees claimed that the electric carmaker violated the US WARN Act as they did not provide sufficient notice before conducting the mass layoffs and filed a lawsuit against Tesla.
In early June, Musk had commented that he had “a super bad feeling” about the economy, igniting a lot of rumors as he said that he will do what is needed to secure his businesses. He had revealed that he will cut the salaried workforce of the carmaker by nearly 10% over three months. “It’s quite clear we expect to grow our hourly workforce. We grew very fast on the salaried side and we grew a little too fast in some areas, and so it requires a reduction in salaried workforce.” He also wanted employees to return to office, asking them to quit if they didn’t agree with the policy.
In an interview given in May 2022, he referred to the Tesla factories in Berlin and Austin as “gigantic money furnaces” as supply chain issues have limited the number of cars the plants can produce. Meanwhile, Tesla shares have dropped by approximately 38% in the last three months, adding to his woes.
He also mentioned that there is a high chance the economy will slip into recession. “I think a recession is inevitable at some point. As to whether there is a recession in the near term, I think that is more likely than not.”
