Tesla Axes Jobs Amidst Production Constraints

Though layoffs at Tesla have attracted the attention of the media, they don’t feature among the top 20 job cuts in both the tech and the auto industries in the last two years, per Challenger, Gray & Christmas Inc. The job cuts at Tesla which will affect 700 employees in California were announced Wednesday by the chief executive officer of the electric car company, Elon Musk, during an earnings call.

But despite the fact that the layoffs at Tesla don’t rank anywhere near some of the largest in corporate history, they have come at a bad time since the company is currently trying to boost the production of its mass market electric car, Model 3. This has left some analysts puzzled.

Staff shortage

“…Meanwhile the company is laying off staff across the organization (and) in the same earnings call management is complaining about being production constrained because of the lack of staff in Fremont,” said Jeffrey Osborne, an analyst at Cowen & Co., after Tesla’s earnings call.

Tesla is aiming to reach a production target of 5,000 units of the Model 3 per week beginning in this year’s fourth quarter. The current delay is being attributed to low supply of batteries as there are constraints being experienced in their manufacture.

With Tesla being partly a technology company and partly a motor vehicle manufacturer, making comparisons with other industries is a complicated task. In the technology sector the single biggest round of layoff in the last two years occurred at Intel when 12,000 jobs were axed last year in April. Early last year Dell also laid off 10,000 employees and another 3,000 when it merged with EMC Corp later in September the same year.

Wider tech sector

A total of 1,070 employees were also declared redundant by Verizon at its various businesses and units. Yahoo for instance gave the pink slip to some 430 employees who were stationed in Sunnyvale, San Francisco and Los Angeles three months ago. Last month enterprise software maker Oracle also sent home 964 employees who were working at its Santa Clara facility besides another 54 who were stationed in San Diego. Earlier in the year Oracle had terminated 441 positions at its Santa Clara offices.

In the auto-manufacturing sector, General Motors laid off 3,300 employees last year in December after having axed 2,000 positions a mother earlier. This year General Motors also declared 2,700 employees redundant in the month of April. Another 1,400 jobs were also axed by General Motors a month later.

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