Tesla to Close Autopilot Office in San Mateo, Lay Off 200 Workers

Electric car and energy company Tesla announced on Wednesday that 200 Autopilot workers will be laid off, with the company’s San Mateo office also to close.

In the last few years, Tesla and CEO, Elon Musk have had largely mixed feeling towards California. While the company has backed the continued operation of the Fremont factory and is currently building a Megafactory in Lathrop, Musk himself left the state in 2020 for Texas, with Tesla’s headquarters following him from Palo Alto to Austin the very next year, both largely due to the business climate and high taxes of California.

However, years of high growth and continued hiring slowed down during the pandemic, with Musk saying late last year that the company needed to curb hiring and reduce the current workforce by 10% in three months, although overall hiring should be back up within a year. Continued worldwide supply-chain issues, as well as financial issues at the new plants in Germany and Texas, hastened cuts. While employees at the San Mateo facility, who labeled videos from Tesla cars to improve Autopilot, the driver assistance system, had expected to move to facilities in Palo Alto or Buffalo, continued company issues, as well as the lease expiring in San Mateo, led to the layoffs on Wednesday.

“Both Berlin and Austin factories are gigantic money furnaces right now,” Musk said last month in an interview. “It should be like a giant roaring sound which is the sound of money on fire.”

Auto and tech experts told the Globe on Wednesday that moves on smaller facilities were expected industry-wide as car companies continue to build themselves up in the current economic climate, with Tesla in particular harming California due to them being the only car company with a major factory and office presence in the state outside of dealerships and other similar places.

“Buffalo is cheaper than San Mateo in terms of how much people make, and they don’t want to give up Palo Alto,” explained  James Kelly, a Bay Area tech advisor, to the Globe on Wednesday. “San Mateo’s lease was also up, and the company needs to make cuts. It was a perfect storm for that Autopilot office.

“For once, it isn’t completely California’s fault though. There’s growing inflation, supply-chain issues, and car companies facing a lot of challenges. Tesla has some problems with factories in Berlin and Austin right now too. If anything, it will make them to want to hold on to their current factory in Fremont, with close access to rail and ports, all the more. If we hit a recession, people won’t be spending as much, and that includes on higher ticket items like electric cars.

“All together, this sadly made the decision to close San Mateo a reality. Tesla never really hit a wall before like all the other car companies, with them being the new kid on the block, so we’ll see how they deal with this. They rumbled through the pandemic, but a prolonged recession, they made it through the Great Recession, but they were also much smaller then. They had only one type of car. Now, they’re huge. We’ll see where this goes.”

June 28th was the employees last working day, with benefits expected to go through October.