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Tuesday May 21, 2024

Elon Musk's mass Tesla firing inside story revealed

Tesla CEO virtually fired whole of electric-vehicle charging division

By Reuters
May 15, 2024
Elon Musk, CEO of SpaceX and Tesla and owner of X, formerly known as Twitter, attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition centre in Paris, France, June 16, 2023. — Reuters
Elon Musk, CEO of SpaceX and Tesla and owner of X, formerly known as Twitter, attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition centre in Paris, France, June 16, 2023. — Reuters

As Elon Musk virtually fired all of Tesla's electric-vehicle charging division last month, they had high hopes a day before as charging chief Rebecca Tinucci went to meet Musk regarding the network's future, as per the statements of four former charging-network staffers to Reuters.

After Tinucci had cut between 15% and 20% of staffers two weeks earlier, part of much wider layoffs, they believed Musk would affirm plans for a massive charging-network expansion.

The meeting could not have gone worse. Musk, the employees said, was not pleased with Tinucci’s presentation and wanted more layoffs. When she balked, saying deeper cuts would undermine charging-business fundamentals, he responded by firing her and her entire 500-member team.

The departures have upended a network widely viewed as a signature Tesla achievement and a key driver of its EV sales. Tesla Superchargers account for more than 60% of US high-speed charging ports, federal statistics show, and the company has been the biggest winner so far of $5 billion in federal funding for new chargers.

This account, the most detailed to date on the Supercharger firings and the fallout, is based on interviews with eight former charging-division employees, one contractor and a Tesla email sent to outside vendors. Only Musk and Tinucci were in the meeting described to Reuters; the four sources with knowledge of the meeting are relaying what they heard about it from Supercharger department managers.

Tesla, Musk and Tinucci did not respond to requests for comment from Reuters.

Despite the mass firings, Musk has since posted on social media promising to continue expanding the network. But three former charging-team employees told Reuters they have been fielding calls from vendors, contractors and electric utilities, some of which had spent millions of dollars on equipment and infrastructure to help build out Tesla’s network.

A letter sent earlier this month by a Tesla global-supply manager to Supercharger contractors and suppliers instructed them to “please hold on breaking ground on any newly awarded construction projects” and halt materials purchases, according to a copy reviewed by Reuters. “I understand that this period of change may be challenging, and that patience is not easy when expecting to be paid!”

Tesla's energy team, which sells solar and battery-storage products for homes and businesses, was tasked with taking over Superchargers and calling some partners to close out ongoing charger-construction projects, said three of the former Tesla employees.

One construction contractor said Tesla staffers contacting his company since the layoffs “don’t know a thing.” The contractor said he had expected Supercharger projects to provide about 20% of his 2024 revenue but now plans to diversify to avoid relying on Tesla.

Tinucci was one of few high-ranking female Tesla executives. She recently started reporting directly to Musk, following the departure of battery-and-energy chief Drew Baglino, according to four former Supercharger-team staffers. They said Baglino had historically overseen the charging department without much involvement from Musk.

The charging-team layoffs mark the latest drama in a tumultuous year for Tesla as Musk has shut down or delayed several core efforts meant to drive the rapid EV sales growth that investors have expected. Instead, Musk now says Tesla will shift its main focus to self-driving cars, a fiercely competitive and riskier business that could take years to develop.

The company posted its first decline in auto sales since 2020 in the first quarter amid fierce competition from Chinese electric-vehicle makers and sagging worldwide EV demand. Reuters reported in April that Tesla had scrapped plans for a long-awaited affordable car known as the Model 2. That has thrown into doubt Tesla’s plans for new factories in Mexico and India, where Musk had been expected to travel last month to meet Prime Minister Narendra Modi, before canceling at the last minute. And a host of executives have departed amid deep companywide layoffs.

Scaled-back charging expansion

The energy team that was assigned to take over charging-network management has some similar design and construction roles, two of the former Tesla employees said. But charging projects are fundamentally different because they are located in public places and require extensive negotiations with utilities, local governments and landowners, they said.

The energy team was already struggling to keep pace with its current workload, said two of the former charging-network staffers. Yet when the layoffs came down on April 30, Musk posted that the company “still plans to grow the Supercharger network, just at a slower pace.” On Friday, Musk posted that “Tesla will spend well over $500M expanding our Supercharger network to create thousands of NEW chargers this year.”