
Company Update - lultimouomo
https://www.tesla.com/blog/tesla-company-update
======
kypro
While I know I could never make someone redundant personally, I do think the
idea that you're owed a job at a company forever is wrong. As someone on the
spectrum, it's not always been easy for me to find work, and I have been made
redundant in a similar manner to this in the past which wasn't an enjoyable
experience. Still, at the time all I could do was express my appreciation that
for a few years that company wanted my services enough to pay me a decent wage
and that I thoroughly enjoyed my time working for said company. I understood
my job was a risk to the company going forward and I held no hard feelings
about the decision made to let me go.

In a perfect world things like this wouldn't happen. Top employees would never
leave for a better paying job, and you'd never have to let employees go to
remain competitive. But this isn't a perfect world. We must prepare for the
worst and hope for best while remembering to treat each other with as much
respect, kindness, and understanding as possible.

Whether or not these specific cuts were needed or sensible, I don't know. What
I do know is that Tesla is a young company in a highly competitive space. Were
I personally to take a job at Tesla I wouldn't expect to be there longer than
a year - especially if I was a temp worker or contractor. Anyone who's worked
at small, early stage startup in the past would know how this story goes. You
often work harder and longer than you would at a more established slower
moving company, you don't get the perks, and you're constantly worrying about
whether or not you'll have a job next month. But it can also be very rewarding
when things go well. These are the decisions you must weigh up as an employee
when looking for work.

~~~
ThePhysicist
I think for a company the size of Tesla it would actually be beneficial to
have a well-organized worker council and union through which the employees
could negotiate with the board of directors when things like this happen.
Often this results in a better solution for everyone.

When the recession hit Germany in 2008 most large automotive companies were
also faced with a massive decline in orders and were forced to aggressively
cut costs. As employees in these companies are heavily unionized they of
course protested against this and the worker council started negotiating with
the board of directors. They found a solution by reducing the work hours for a
large percentage of their workers (with an accompanied pay cut) instead of
firing a smaller percentage of them, which allowed them to retain almost
everyone and at the same time reduce costs. When the economy sped up again
they were able to just increase the working hours again. This was great for
the employees (as they didn't lose their jobs) but also for the companies,
because they didn't have to find and train new employees after the crisis was
over.

I'm wondering why Tesla isn't considering something like this as I imagine
there's a lot of training involved in many jobs at their factory, and it's
probably very costly to rehire and retrain new employees when the growth picks
up again. Just my 2 cents.

~~~
300bps
_I’m wondering why Tesla isn’t considering something like this_

I’m thinking it’s because they aren’t firing people at random. They’re letting
go their weakest performers. This is very common and has been encouraged in
business for decades:

[https://www.inc.com/paul-b-brown/should-you-fire-10-of-
your-...](https://www.inc.com/paul-b-brown/should-you-fire-10-of-your-
employees-every-year.html)

~~~
matwood
In principle I agree that companies should always get rid of people who are
not working up to some defined standard. I disagree that a company should
stack rank and get rid of the lowest performers for no other reason than
'because'. Hiring and firing is hard, and very disruptive. If the whole team
is better than the standard set by the company, the company should consider
itself lucky and not screw it up.

With that said, in large companies it can be very hard to determine just who
is below whatever standard is set. Instead it becomes more of a game to be
liked by your manager or claim credit for work.

By the way, part of working at or above a standard also includes not being an
asshole.

~~~
Xylakant
I also think stack-ranking is hard or even impossible to get right. The
criteria often favor those people that produce visible work and tend to
disfavor people that enable said work (think: producing new features vs.
maintenance, writing high-profile code vs. doing the review for those,
producing visible output vs. mentoring, ...)

So stack ranking (or any kind of ranking by criteria) tends to nudge people
into "let's do what the standard expects us to do" instead of "let's do what
makes the team, company and product improve."

------
lukeqsee
I was an early investor in Tesla (I cashed out a few years ago). I believe in
their mission. I wish their success.

But this is hard, simultaneously telling your workforce:

    
    
        1) We need to you work harder, better, and faster.
        2) To help you achieve this, we will be reducing your headcount (and thus resources) by 7%.
        3) By the way, if you fail, the company fails.
    

…But keep your heads up, it's for the planet! At some point these thousands of
folks that remain are going to start asking "Is it worth it?" That coupled
with legitimate competition from their "entrenched" competitors, 2019 looks to
be a very difficult year for Tesla.

I still hope they succeed; I just hope the real, human costs are worth it.

~~~
mrpopo
I don't believe Tesla will do any good for the planet overall. The only way we
can do good is if we sell less individual cars, not more, whether electric or
not. Nowhere in Tesla's vision can I see a plan for more electric buses and
trains. The USA desperately need a viable train network for the 21st century.

~~~
wongarsu
They already did good for the planet (as well as humanity).

Any time somebody already planned to replace their car and chooses electric
over ICE is a win for the planet. It's also a health improvement for humans
living in urban environments.

Tesla might not be selling that many cars, but they are the major reason why
established brands like Volkswagen feel pressure to "catch up" and massively
invest in new EV lineups. Once those companies have caught up in terms of
technology and lineup they will massively outsell anything Tesla is capable
of, helping reduce our impact on the climate and our health.

Of course public transport would be even better, but don't let the perfect be
the enemy of the good

~~~
mrpopo
> Any time somebody already planned to replace their car and chooses electric
> over ICE is a win for the planet.

This is sadly not really true, especially in China, the biggest electric
vehicle market, where most of the electricity is coal-generated. You end up
with a car requiring more energy (e.g. more fossil fuels) to produce AND to
run.

The situation is not very pretty in the USA yet either, but if you are hopeful
in the next decade that the USA will decarbonate their electricity, then maybe
you will get a positive return on GHG emissions over your car lifetime.

Electric cars as a means to reduce GHG emissions todaly only make real sense
in specific countries with a low-emissions electricity profile, such as France
and northern Europe (Sweden etc).

~~~
purple_ducks
Not having the byproduct waste of energy production pumped into populated
areas is a _massive_ gain(regardless of whether there is overall increase in
usage of GHG).

Waste from coal powered electricity isn't emitted by every consumer in
populated areas. It's emitted in a plant which

a) generally has more advanced particular matter capture technology &

b) to reduce emission further, only the place emitting the emissions needs to
be upgraded(not the vehicle of every end consumer of that energy) &

c) is more readily replaceable by a cleaner source with minimal disruption.

------
yoavm
Reading this I ask myself why does one chooses to work in such a work
environment? Are people working there doing it because they feel they're part
of a bigger dream? Seems to me like it's very hard to feel this way when
you're so replaceable. At the end of the day I guess the work is similar to
working in many other car brands, just harder, more hectic and managed more
poorly. Are there any special benefits that I'm missing? (I'm really
wondering, not trying to put anyone down)

~~~
ericb
I don't work at Tesla. Here is why I would:

I'm on team humanity. In spite all our failings, I want humanity to succeed
and reach for the stars. Success means having a livable planet. For idealists
like me _who are also realists_ , the _only_ way to get everyone working
toward this future is to put it in their self-interest. Anything else just.
won't. work.

To dedicate yourself in a practical way to the future of humanity, Tesla's one
of the few games around.

~~~
fulafel
EVs don't solve the CO2 footprint of cars, the improvement is too small. We
must drastically reduce the low-occupancy car miles driven and reverse the car
growth trend in developing countries.

~~~
virgilp
Your comment makes A LOT of assumptions - in both ways e.g.:

\- you are ignoring the benefits that EVs could bring, as well as synergies
with future technology improvements. Radically better battery technology
coupled with cheap, affordable solar might be a game changer of unprecedented
scale.

\- On the other hand, there's no proof that "drastically reducing the low-
occupancy car miles driven" or "reversing the car growth trend" is either
feasible or beneficial (how do you achieve the goal? Any measure is likely to
have side-effects. I haven't seen any realistic proposal that doesn't have
potentially horrible side-effects).

Lastly, let me just tell you that I love it when people living in developed
countries know what developing countries should do (which is typically "stay
poor", but delivered in a more politically-correct way)

~~~
majewsky
> I haven't seen any realistic proposal that doesn't have potentially horrible
> side-effects.

What are the horrible side effects of car pools?

~~~
virgilp
Car pools are "desired effects", maybe - for sure they aren't "realistic
proposals".

There are no horrible side effects to "a healthier population"; however, the
prohibition showed us that there may indeed be bad side-effects to banning
alcohol consumption & distribution (which could be argued as a measure that
leads to a healthier population).

------
empath75
Remember things like this when you’re thinking of leaving your job for greener
pastures and want to stay out of a sense of loyalty. Your company is not loyal
to you and that we drop you the second you’re no longer useful to them.

~~~
OJFord
> Your company is not loyal to you and that we drop you the second you’re no
> longer useful to them.

Of course it will.

Why would/should/could it do any differently?

~~~
mikro2nd
Because the inverse seldom seems to be true. Employees are usually expected to
be loyal to the corporate cause (or at least give some appearance of loyalty).

During one assessment many years ago I was accused of not being sufficiently
"loyal", and I (ah, youth!) responded, "You want loyalty? Get a dog."

Needless to say it didn't go well for a little while until a higher-up manager
squashed the whole thing because he agreed with my point of view.

~~~
MarsAscendant
> During one assessment many years ago I was accused of not being sufficiently
> "loyal", and I (ah, youth!) responded, "You want loyalty? Get a dog."

Never grow up, I'd say.

~~~
WrtCdEvrydy
> not being sufficiently "loyal"

25% yearly raise is what I quote for 'loyalty'

------
mgw
These cuts seem much more like an unplanned event and an indication of things
not going according to plan than the cuts in the middle of last year. Those
seemed like a good way to readjust to the realities of high volume production
and get rid of redundancies.

I wonder in which areas of production they've experienced slower progress than
what they'd anticipated last year.

~~~
brianwawok
Cutting the worst 7% of your workforce isn’t a terrible outcome. With that
much hiring you are bound to find some employees that aren’t as good as
others.

~~~
lultimouomo
When you announce you're doing significant cuts and that you hope, maybe, to
get a tiny profit for next quarter, and then after that things will be _even
worse_ , I think you're also going to lose some of the best of you workforce,
as they'll start looking around.

~~~
brianwawok
Depends if they believe in the mission or not. I feel a lot of people that are
Tesla people think they are changing the world. They aren't quitting cuz
profit margin is "low". They could have already worked for Bank of America
doing boring backoff programming if they wanted a stable and profitable job.

------
nopriorarrests
Stock is -8.15% on pre-market trading.

Normally layoffs are viewed as positive or neutral event, but this paragraph
-- " In Q4, preliminary, unaudited results indicate that we again made a GAAP
profit, but less than Q3. This quarter, as with Q3, shipment of higher priced
Model 3 variants (this time to Europe and Asia) will hopefully allow us, with
great difficulty, effort and some luck, to target a tiny profit" does not
instill much confidence, I guess.

~~~
aboutruby
Not sure where you found that figure, I see 0.36% up and no major change in
the past 10 days.

~~~
sokoloff
I show closing trade yesterday of 347.31, currently bid 322.93 by ask 323.59.

------
ReptileMan
We will have a lot more work in 2019 so we must downsize our workforce
definitely rings counterintuitive to me.

~~~
refurb
It’s because the financial pressure is increasing. High margin car demand is
going to come down. Tesla made a small profit on those. Now comes the low
margin cars. If Tesla wants to be profitable on those, costs will need to be
cut.

------
johannes1234321
Key point is towards the end:

"As a result of the above, we unfortunately have no choice but to reduce full-
time employee headcount by approximately 7%"

~~~
negus
If you are experienced with media messages enough, you always start reading
such messages from the end. I most cases introduction is totally meaningless
and is used to make the message polite.

------
tome
Why would you grow staff by 30% just to fire 7% of people next year?

~~~
rb808
Rank and Yank. Hire lots of people and get rid of the people that aren't
performing.

Its great when you're a high performing company that everyone wants to work
for, doesn't work if you aren't doing well and people have an extra reason to
avoid you (see GE, GS right now)

------
bnt
First 10% of SpaceX, and now 7% of Tesla. Wonder how much of those 7% are
SolarCity folks.

~~~
radiusvector
Hopefully a lot? The SolarCity acquisition seemed shoddy to begin with.

~~~
andrewmcwatters
I don't know how SolarCity makes any money. The last time I looked into
purchasing panels from them, it was 20 years to _break even_ on your purchase.
What a joke.

~~~
talltimtom
Where’s the joke in that? You buy the installation on a 30 year fixed loan and
reducere your power Bill tomorrow.

To compare, what is the “break even” point of buying a property and renting it
out?

------
11thEarlOfMar
The interesting tradeoff seems to be investments in future models &
infrastructure vs. expense of current workforce. Tesla is investing in
developing 4 new models, production capacity for model Y, building 2 more
gigafactories, building 1,000s of superchargers globally, building capacity
for solar roof production, and I don't know where they are with powerwall.

Once to 10k is out, we can size it up, but my guess is that all that capital
spend is greater than the cost of employing the 7%. Would be interesting to
see the math that went behind the decision.

~~~
sortoftechguy
> _Tesla is investing in developing 4 new models, production capacity for
> model Y, building 2 more gigafactories, building 1,000s of superchargers
> globally, building capacity for solar roof production_

Tesla _claims_ to be doing all this, but the financials say different. Their
CapEx has not increased in many quarters (it actually decreased at one point
recently). So can you explain to us how you think they are doing all this?
Where does the money come from?

~~~
cjhopman
Exactly. I'm really worried about the service and supercharging
infrastructure. In the last year (to q3-18, q4 stats aren't out), we've gone
from one service center per ~800 cars to one service center ~1200 cars. We've
gone from a supercharger per ~30 cars, to a supercharger per ~40 cars.

------
andy_ppp
What I don't understand is why Tesla has to do this - wouldn't it be better
just to run at a loss for a few more years like most other tech companies do,
deliver a better high tech car for a while and then start to reduce cost once
self driving comes in?

I mean the whole premise of Uber existing is based on this idea and I see
Tesla as being potentially even more profitable (and more likely to have
working self driving vehicles)...

~~~
sokoloff
Only if people will continue to lend you large sums of cash required. Run out
of cash and it’s off to bankruptcy court.

There’s good evidence that Tesla was weeks away from this outcome in the fall
and IIRC they have a large loan payment due this spring.

If they can’t meet it (from operating cash flows or further borrowing), they
can’t keep operating. There, they are risking ownership and control of the
whole company rather than the jobs of 1/14th of the company.

Minor point, but since you included it: I wager: full self-driving is still a
decade or more away.

~~~
sortoftechguy
> _There’s good evidence that Tesla was weeks away from this outcome in the
> fall and IIRC they have a large loan payment due this spring._

Good evidence? Elon himself said it.

And yet outsiders denied it then, and are _still_ denying it. This company is
in a cash-crunch.

~~~
sokoloff
I agree that Elon said it. His credibility is not the highest, and I phrased
it that way because there was additional outside correlated data and not just
“because Elon said it”.

------
leavjenn
Tesla starts building Gigafactory in China, expects to begin production in the
second half in 2019. Also they start for hiring locals[1]. Is this related?

[1][https://www.cnbc.com/2018/12/06/teslas-china-factory-set-
to-...](https://www.cnbc.com/2018/12/06/teslas-china-factory-set-to-begin-
production-late-next-year.html)

~~~
sortoftechguy
> _Tesla starts building Gigafactory in China_

Tesla didn't start to build anything. The Chinese government put them on
notice because there was no work done. So, of course, Elon flies by himself to
China to put on a grand opening show and says they'll start production in a
year.

How is it this community, who prides itself on being so smart, can fall for
this?

No car factory has ever been built that fast. How can it be in production in
less than a year? Where is the money coming from? After the disastrous Model 3
launch, are there still people on the planet that think Musk knows more than
the incumbents about building a factory? Remember 3D assembly lines and robots
so fast you'll need a strobe light to see them?

It's astonishing that people are still buying into this story.

------
mathattack
The lay-off is small in context. It’s less than a quarter of their prior year
headcount growth, and much lower than what Detroit Auto has experienced. Auto
companies routinely let broad swaths of employees go. Big doesn’t mean safe.

It still is terrible for people who have everything to Tesla over then past
few years. At least they are leaving for a hot job market.

~~~
justin66
> At least they are leaving for a hot job market.

Auto workers in Northern California?

~~~
mathattack
Lots of autonomous startups, and auto divisions in larger tech companies. Most
mainstream auto companies have a presence here.

------
tapland
Knew from the start that there were some cuts coming, but then it was really
hopeful until the 7% figure dropped.

I wish people laid off good luck.

------
notananthem
They're not profitable. With different leadership tesla itself could be maybe.
What a shitshow though

~~~
pscsbs
Tesla is profitable.

[https://www.theverge.com/2018/10/24/18019048/tesla-
earnings-...](https://www.theverge.com/2018/10/24/18019048/tesla-earnings-
elon-musk-revenue-profit-share-value-report)

~~~
7e
Retained earnings are in the many negative billions.

