After San Jose Mercury News first reported Friday that Tesla was firing 400 to 700 employees of the motors division, speculation swirled. The Model 3 was behind schedule, and terminating workers in the division seemed a less-than-ideal way to solve its current production issues.
A CNBC report today paints a different picture, albeit one that could be far worse: the layoffs may have been a cost-cutting measure, having nothing to do with performance. “Seems like performance has nothing to do with it,” one Tesla employee told CNBC. “Those terminated were generally the highest paid in their position,” this person said, suggesting that the firings were driven by cost-cutting.
Tesla employees are graded on a scale from 1 to 5, at least two of the employees had scores of 4 or better during the last performance review, according to CNBC sources.
Tesla had this to say, via press release:
Like all companies, Tesla conducts an annual performance review during which a manager and employee discuss the results that were achieved, as well as how those results were achieved, during the performance period. This includes both constructive feedback and recognition of top performers with additional compensation and equity awards, as well as promotions in many cases. As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures. Tesla is continuing to grow and hire new employees around the world.
Also notable is the number of firings. Originally reported as 400-700, one former employee (citing information from a current manager) is now claiming the number of terminated workers exceeds 700.
What’s going on, Tesla?
We’ve reached out for further commentary, and will update if needed.