Tesla Lays Off 3,332 Employees In California

According to Worker Adjustment and Retraining Notification (WARN) notices filed on Tuesday, electric vehicle and battery manufacturer Tesla announced that they will be eliminating around 6,000 jobs nationwide, including 3,332 in California and 2,688 in Texas.

Founded in San Carlos, California in 2003, billionaire Elon Musk grew the company throughout the decade. By the 2010s, Tesla became the premier electric car company in the United States. Headquartered in Palo Alto, Tesla also placed their first factory in Fremont, taking over the former GM plant there, and soon built up their presence in California. While economic and other factors forced the company to relocate their headquarters to Austin, Texas in late 2021, the company nonetheless kept up their presence in the state.

In addition to the factory and multiple showrooms in the state, the company added a battery factory in Lathrop, more offices in Southern California, and moved their engineering and AI HQ back to Palo Alto only last year. In 2022, Fremont was also named the most efficient auto plant in the entire country.

However, in recent years, warning signs for Tesla have presented. In 2022, the company laid off 200 workers in San Mateo due to curbed growth during the pandemic. Tesla also has had slipping sales, with the company falling far below expectation during Q1 2024. Combined with an overall cooling of the electric car market, more overall competition, and recent recalls of their vehicles, Tesla had warned that they could be letting go as much as 10% of their worldwide workforce.

On Tuesday, Tesla made good on their promise, announcing that around 6,000 people would be laid off in the U.S. Within California, losses were at 3,332. According to the WARN filings,  2,266 of those let go in California would be at the Fremont factory, with 486 also being let go in Palo Alto. Significant numbers would also be let go in Lathrop and Burbank, with the rest being let go from individual showrooms, stores, and service centers.

Over 3,000 laid off in California

“The layoffs will prepare Tesla for our next phase of growth, as we are developing some of the most revolutionary technologies in auto, energy and artificial intelligence,” said the company in an SEC filing last week.

Musk also said last week: “As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity. As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally.”

While the layoffs were ultimately expected, many in California were not expecting over half the cuts to come from the state, especially considering underperforming plants in both Austin and Berlin.

“With so many Tesla factories and offices and things in California, we were expecting a chunk of the layoffs stateside to be here,” Los Angeles-based automotive analyst Justin O’Rourke told the Globe on Tuesday. “But the Fremont plant had about as many layoffs as the Austin plant. Palo Alto was also hit pretty hard again. Tesla is firmly non-union, so it made this process pretty smooth. If the UAW was involved, there would be negotiations and they would likely pull that “half union, half non-union” firing card they always do.”

“Tesla isn’t doing so hot right now, and they were really stung by that cybertruck recall. They wanted that to be their big way to enter the truck market, but it fell apart. Tesla isn’t the most desirable car now, as the other big manufacturers have stepped up their hybrid and electric game.”

“Overall, Tesla is looking at a course correction, and they figured that a leaner staff and a new focus will help them get there. Time will tell if it does. They need the public to trust them again and see them as the ones ahead of the pack. The cybertruck wasn’t the way to do it, so they need another card from their sleeve to make it happen.”