The Inside Story of Elon Musk’s Mass Tesla Supercharger Employee Layoffs

(Reuters) – A day before Elon Musk fired virtually all of Tesla’s electric vehicle charging division last month, they had high hopes when charging chief Rebecca Tinucci went to meet with Musk about the future of the network, four former charging network employees told Reuters.

After Tinucci had cut between 15% and 20% of staff two weeks earlier as part of much broader layoffs, they believed Musk would confirm plans for a massive expansion of the charging network.

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

The departures upended a network widely seen as Tesla’s signature achievement and a key driver of its electric vehicle sales. Tesla Superchargers represent more than 60% of U.S. 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 about the Supercharger firings and the aftermath, is based on interviews with eight former employees of the charging division, a contractor, and a Tesla email sent to outside vendors. Only Musk and Tinucci were at the meeting described to Reuters; the four sources with knowledge of the meeting are relaying what they heard from Supercharger department managers.

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

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

A letter sent earlier this month by a Tesla global supply manager to Supercharger contractors and suppliers instructed them to “wait for the start of any newly acquired construction projects” and stop material purchases, according to a revised copy. by Reuters. “I understand that this period of change can be challenging and that patience is not easy when waiting to be paid!”

The energy team at Tesla, which sells solar and battery storage products to homes and businesses, was tasked with taking control of Superchargers and calling some partners to shut down ongoing charger construction projects, three of the former employees said. from Tesla.

A construction contractor said Tesla employees who have contacted his company since the layoffs “don’t know anything.” The contractor said it expects Supercharger projects to represent about 20% of its revenue by 2024, but now plans to diversify to avoid relying on Tesla.

The story continues

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

The charging team layoffs mark the latest drama in a tumultuous year for Tesla, as Musk has terminated or delayed several key efforts aimed at driving the rapid growth in EV sales that investors had been hoping for. Instead, Musk now says Tesla will shift its main focus to autonomous cars, a fiercely competitive and riskier business that could take years to develop.

The company reported its first decline in auto sales since 2020 in the first quarter, amid fierce competition from Chinese electric vehicle makers and declining global demand for electric vehicles.

Reuters reported in April that Tesla had abandoned plans for a long-awaited affordable car known as the Model 2. This cast doubt on Tesla’s plans for new factories in Mexico and India, where Musk was expected to travel last month to meet the Prime Minister. Narendra Modi, before canceling at the last minute. And a slew of executives left amid deep companywide layoffs.

Reduced loading expansion

The energy team assigned to take over management of the charging network has similar design and construction roles, two 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 up with its current workload, two former charging network employees said. However, when the layoffs took place on April 30, Musk posted that the company “still plans to expand the Supercharger network, just at a slower pace.” On Friday, Musk posted that “Tesla will spend well over $500 million expanding our Supercharger network to create thousands of NEW chargers this year.”

Two former Supercharger employees called the $500 million expansion budget a significant reduction from what the team had planned for 2024 — but nonetheless a challenge requiring hundreds of employees. In an analysis provided to Reuters, San Francisco research firm EVAdoption estimated that a $500 million investment this year would translate into Tesla building 77% fewer charging ports per month in the United States compared to the pace of manufacturer until April.

‘Holding the bag’

Tesla unveiled its first Supercharger stations across California in 2012, with Musk calling the network a “game changer” for electric vehicles that would enable long-distance travel and convenience “equivalent to gasoline cars.”

The electric vehicle charging business requires a substantial initial investment and analysts often consider it unprofitable. But Tesla’s network was profitable before the layoffs, according to four former Tesla employees familiar with the division’s financial performance.

This was due to Tesla’s cost control and extensive analysis to choose locations that could attract business throughout the day, rather than just during peak demand times when electricity costs rise. A former Supercharger employee said Tesla’s costs per charging port were typically at least 50% lower than competitors’.

Just last month, Tesla said in a securities filing that it needed to expand charging to “ensure adequate availability” for customers, especially after automakers including Ford, General Motors, Toyota and Hyundai announced they would begin making their cars compatible. with Tesla charging. plugs, giving your vehicles access to the Supercharger.

Another former employee said the rollout is “completely compromised” because there won’t be enough new charging locations online and the company was just beginning to roll out updates to allow for greater compatibility with vehicles from other manufacturers.

Three of the former employees called the layoffs a major setback to the expansion of charging in the U.S. due to the relationships Tesla employees had built with electric suppliers and utilities. Tesla has become one of the biggest customers of many large utility companies across the country, and many have hired new employees and planned new infrastructure based on Tesla’s charging network expansion plans, the former employees said.

Other companies will be able to fill the gap, the former employees said, but the goodwill built over time with utility companies and other contractors from Tesla’s large-scale charging investments will be difficult to replicate.

“It’s a shame that now they’re stuck on all these different projects,” one of the former employees said. “It’s really sad to see all these relationships destroyed and people getting really angry – rightfully so.”

(Reporting by Chris Kirkham in Los Angeles and Hyunjoo Jin and Abhirup Roy in San Francisco; editing by Brian Thevenot and Matthew Lewis)