from the where-there's-firing-there's-smoke? dept.
Tesla has fired several hundred of its employees following performance evaluations. Tesla recently conducted the biggest expansion of its workforce in the company's history, and is struggling to increase production of its Model 3 sedan:
Tesla Inc. has fired an undetermined number of employees following a series of performance evaluations after the company significantly boosted its workforce with the purchase of solar panel maker SolarCity Corp.
The departures are part of an annual review, the Palo Alto, California-based company said in an email, without providing a number of people affected. The maker of the Model S this week dismissed between 400 and 700 employees, including engineers, managers and factory workers, the San Jose Mercury News reported on Oct. 13, citing unidentified current and former workers.
"As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures," the company said in the statement. "Tesla is continuing to grow and hire new employees around the world."
The company has more than 2,000 job openings on its careers website.
The dismissals come after Tesla said it built just 260 Model 3 sedans during the third quarter, less than a fifth of its 1,500-unit forecast. The company has offered scant detail about the problems it's having producing the car. The vehicle's entry price starts at $35,000, roughly half the cost of Tesla's least-expensive Model S sedan.
Also at NYT, Reuters, and The Mercury News.
Related Stories
Auto production is hard:
Having racked up its first quarter of burning through more than $1 billion of cash in the three months ending in June, Tesla topped that with $1.4 billion of negative free cash flow in the third quarter. In the past two quarters, therefore, Tesla has burned through more cash than the previous six combined. More importantly, it has burned through roughly four out of every five of the $3.2 billion dollars it has raised since late March through selling new equity and convertible debt and its debut in the high-yield bond market.
Consequently, debt has soared. Even just using debt with recourse to the company, on a net basis it has almost tripled since the start of the year to $3.36 billion.This would matter less if the primary objective of sucking in most of that external funding -- mass production of the Model 3 -- was fast approaching. Instead, it has receded further.
When Musk first talked about production targets for the Model 3 in 2016, they implied Tesla would be producing roughly 3,800 to 7,600 a week in the second half of 2017. By July of this year, Musk was guiding toward production hitting about 5,000 a week by the end of December. I estimated at the time that this implied a second-half average of maybe 1,400 a week.
Now, Musk estimates production might hit 5,000 a week by the end of the first quarter of 2018. As for this year, it might be in "the thousands" by the time New Year's Eve rolls around. He refused to say what the current run rate was. But I would estimate Tesla will be lucky to produce 10,000 Model 3 vehicles in total this year, or an average of 400 a week for the second half -- roughly 5 to 10 percent of the original guidance. As for the earlier target of 10,000 a week in 2018 ...
Also at NYT and MarketWatch.
Previously: Tesla Adds Lots of Certified Pre-Owned Model S Vehicles for Under $40,000 with New Warranty
Time to Bash Tesla Model 3
Tesla Reportedly Teaming Up With AMD for Custom AI Chip
Tesla Fires Hundreds of Employees
Tesla has been sued by an employee for alleged racist harassment and termination for complaining:
Tesla Inc.'s production floor is a "hotbed for racist behavior," an African-American employee claimed in a lawsuit in which he alleged black workers at the electric carmaker suffer severe and pervasive harassment. The employee says he's one of more than 100 African-American Tesla workers affected and is seeking permission from a judge to sue on behalf of the group. He's seeking unspecified general and punitive monetary damages as well as an order for Tesla to implement policies to prevent and correct harassment.
[...] The lawsuit was filed on behalf of Marcus Vaughn, who worked in the Fremont factory from April 23 to Oct. 31. Vaughn alleged that employees and supervisors regularly used the "N word" around him and other black colleagues. Vaughn said he complained in writing to human resources and Musk and was terminated in late October for "not having a positive attitude."
Although customers who have reserved a Tesla Model 3 (at a cost of $1000) have seen their delivery dates pushed back, they apparently remain loyal to the company:
Even as the company led by Elon Musk struggles with manufacturing bottlenecks and pushes back production targets by at least a quarter, many reservation holders aren't budging. Bloomberg News contacted 20 consumers who paid deposits for the Model 3 and none had canceled their orders. Regardless of the concerns raised by slower output and an uncertain future for U.S. electric-car tax credits, Nomura analyst Romit Shah predicts the affinity for Tesla Inc. products will prevail. "We believe there is a real passion for the brand," Shah wrote in a report to clients that reiterated a $500 price target for Tesla shares, the highest on Wall Street. "It is bigger than loyalty because much of the enthusiasm comes from people who have never owned a Tesla. The only comparable we see is the iPhone."
Finally, Elon Musk says that the Tesla Semi Truck will be unveiled during a live webcast at 8 PM on Thursday, and that it will "blow your mind clear out of your skull and into an alternate dimension".
Previously: Elon Musk Says Tesla Pickup and Semi-Trucks Are Coming
Time to Bash Tesla Model 3
Tesla Discussing Autonomous Semi Truck Testing in Nevada
Tesla Fires Hundreds of Employees
Tesla Burns More Cash, Fails to Meet Production Targets
If Elon Musk can increase Tesla's market value 12-fold in the next 10 years, he may be entitled to a maximum of $56 billion in stock awards (likely lower if more shares are sold to the public). This, along with the ballooning of Musk's existing $12 billion share in his company, and his stake in SpaceX and other companies, could help Musk become a Kardashev I trillionaire alongside Jeff Bezos:
A new payment plan for the CEO was approved by Tesla (TSLA) shareholders Wednesday, a spokesperson confirmed. The incentive-based package essentially states that if Musk hits a series of performance milestones between now and January 2028, and he drives his electric car company's market value 12 times higher — taking it from $54 billion to $650 billion — he'll become astronomically rich.
Now, if Musk does drive a 12-fold increase in Tesla's market value, that doesn't necessarily mean the price of a single share in the company will be 12 times larger. The company can do things like issue new stock that could dilute the value of existing shares. But let's assume Musk's Tesla stock would grow at least 10 times more valuable. That would mean just the shares Musk owns today would be worth $120 billion.
Plus, reaching the agreed upon milestones means Musk would get additional stock awards. According to the new compensation plan, Tesla estimates the value of the stock awards to be $2.6 billion, using accounting methods for estimating the cash value of stock options. But if Tesla's market value balloons just as the payment plan hopes, those stock awards could be worth nearly $56 billion, according to a public filing.
Also at Reuters, Fortune, and CNBC.
Related: Tesla Fires Hundreds of Employees
Tesla Burns More Cash, Fails to Meet Production Targets
Tesla Sued Over Alleged Racism; Deliveries Pushed Back; Semi Truck to be Unveiled
Tesla Semi Truck Will Have a 500+ Mile Range
Tesla Delivers on 100 MW Australian Battery Promise
Elon Musk Vows to Build Tesla Pickup Truck 'Right After' Model Y
Woz Likes his Tesla, Doesn't Trust Elon
Tesla Creating Huge Virtual Power Plant
Elon Musk Expects to Do Coast-to-Coast Autonomous Tesla Drive in 3 to 6 Months
(Score: 1) by sonamchauhan on Sunday October 15 2017, @03:01AM (7 children)
Look like stacked ranking strikes again. Aka Rank-and-Yank. Forced distribution. Vitality curve.
Tesla's got company. Yahoo. Amazon. Microsoft. Tesla. Enron. General Electric.
(Score: 2) by JoeMerchant on Sunday October 15 2017, @01:07PM (6 children)
Sometimes rank and yank is necessary, even for morale if you've got bad enough apples in the barrel.
Most times rank and yank is a cover for a bad quarter, dropping near term labor costs to make up for a sales miss or other miscalculation.
Either way, it's not usually a great sign for future employees considering the company.
🌻🌻 [google.com]
(Score: 4, Informative) by VLM on Sunday October 15 2017, @03:14PM (3 children)
My only disagreement is over removing "usually". All game state conditions beyond its implementation are always no-win for the employee.
Lets say the rank process is, by a miracle, the first one in the history of the business world to not be corrupt. It could happen! It probably won't, sure, but it could. Then the newest employee who just got hired will get the axe. "Obviously" someone with 3 months experience in position will lose compared to someone with 5 years in the same position, assuming recruitment isn't awful (LOL) and ranking process isn't incredible corrupt (LOL). Assuming hiring HR dept doesn't suck (LOL) as a new hire I'm not any better than the previous hires, so the rank "should" be strictly hiring date. So you end up with untouchable old timers, a giant experience gap, and noobs who only last one ranking interval. This dooms the company in the long run as no experience can build up and the old timers eventually die/retire/quit. The doomed company means more firings until really good people are getting kicked out and the company dies.
Lets say the rank process is corrupt, as all are. Then its also always losing for the employee. If you're canned, its because your boss is shallow and would prefer different demographics employees (racism, etc) or even stupider and more unprofessional reasons like you're a fan of the "wrong" sportsball team or political party or religion. If you survive the firings, its because you're surrounded by brown nosers and similar low productivity people which means there will be lower productivity and MORE firings in the future until you're gone. A company staffed entirely by brown nosing fake number generating BSers will die in competition with companies staffed by the productive people they fired...
I've never had to work for a rank-n-yank company and if I did I would only mark time until I can get a job at a better company with more professional management aka no rank-n-yank.
Essentially stack ranking means management being so stupid that they think punishing current employees will fix a toxic hiring process. That MIGHT actually work if the rank-n-yank were limited strictly to HR, but strangely the people who Fed everything up are usually immune from the firings.
A company can survive awhile if they're a monopoly or govt corruption/licensing, but eventually it catches up.
(Score: 2) by JoeMerchant on Sunday October 15 2017, @10:23PM (2 children)
Last time I experienced rank and yank, apparently I made the cut on merit. Whether that was my technical ability, social graces, or just because I was a WASP, I was last hired, had been there for a little under 2 years, and they let an Asian who had been there for 6 years go. In simple point of fact: the balance of M-WASP employees dramatically shifted upwards during that rank and yank exercise - and maybe it was all merit based, who knows? The place was too small (1000 employees, reduced to 900) for the real statistical arguments to start to take hold. Don't cry too much for our Asian friend, based on service he got 6 weeks severance pay and was rehired at his same type of job and pay level within 2 weeks.
That particular place did another 10% cull about a year later, but by then I was relocated, as was about 20 of our department of 30. I think with voluntary attrition they sunk down to about 600 employees at the end, voluntary attrition was disproportionately high in my department. After that, the man-boy CEO had taken his golden parachute away with his bestest buddies and things settled down to a more sane state.
So, agree - perpetual rank and yank is a dismal, unsustainable policy. However, I have seen it used productively (in other places) as one-off solutions to accumulated deadwood - resulting in increased morale due to the actual workers not having to pick up others' messes so often.
🌻🌻 [google.com]
(Score: 3, Interesting) by VLM on Tuesday October 17 2017, @12:06PM (1 child)
At better run companies, the mess makers get fired without higher HQ coordination across multiple depts.
That also badly hurts well managed departments, because if they fire their deadwood, then they have to fire 10% good people, whereas badly run depts will merely lose deadwood. Its a form of punishing good managers while rewarding bad managers.
Clearly in your example the asian was a great employee if they got picked up that fast, and the manager who fired him was just being punished by having to get rid of a great employee, whereas incompetent management was rewarded in that example by only losing deadwood.
(Score: 2) by JoeMerchant on Tuesday October 17 2017, @03:44PM
Oh, that place that let the Asian go was a mess on many levels - upper management had hired a whole new department full of useless sales (useless because management had failed to open the market for them to sell into), that department increased total company headcount by about 15%, but when it came time to trim back from that mistake, "10% across the board" cuts were made, keeping 90% of the useless sales, useless as all 40+ quarters since then have demonstrated. My particular department had grown quickly over the previous 3 years (including myself), and once we got there we all recognized that upper management really had no use for actual R&D - they just needed it on the balance sheet to snow the street into thinking that great things were in development, in actual practice they did things like mandate 100% audits of the product in development to ensure it wasn't going to launch.
🌻🌻 [google.com]
(Score: 1) by sonamchauhan on Sunday October 22 2017, @10:18AM (1 child)
Hmm... morale improving, even as beatings continue, implies a high degree of trust. Often, unwarranted trust.
An interesting management book made the point that _no_ layoffs - to 'rank and file' - are _ever_ warranted; no matter how 'sick' the firm. But 'public executions' (not golden parachutes) of high-level managers most responsible are not only warranted, but necessary to improve morale.
(Score: 2) by JoeMerchant on Sunday October 22 2017, @02:41PM
Hmmm... maybe you've never worked with deadwood? It would seem unlikely, as prevalent as it has been in my experience and the experience of anyone I have discussed the issue with.
The single biggest management headache I have encountered is deadwood - and not the Wally themselves, that is a small problem - the bigger problem is what Wally does to the morale of people who actually try to do their job. Even when people aren't dependent on Wally to get their job done, his very presence in the environment brings down morale. It isn't even a question of "fair" - we had a Wally who everybody knew "worked" for minimum wage, while the rest of the crew was making upwards of 10x that money, but his simple presence on the shop floor was frustrating - sometimes to the point of infuriating - to the people who were working hard to get things done.
Maybe you've only worked for tyrants? There does tend to be less blatant deadwood under tyrants, it disguises itself better if it hopes to survive there - but it still exists and still brings down morale of the people who are trying hard. Some tyrants are outright counterproductive and the organization would grow with their removal, but most that I have encountered have built a unique ecosystem under themselves and removal of the tyrant (or replacement with a more balanced, reasoning leader), would leave the rest of the company floundering without the iron-fist guidance, even if the guidance was less than optimal.
🌻🌻 [google.com]
(Score: 2) by Runaway1956 on Sunday October 15 2017, @03:02AM (16 children)
Yeah, if our plant only achieved 20% of production, a whole lot of us would be out of work too.
(Score: 5, Informative) by n1 on Sunday October 15 2017, @03:13AM (7 children)
It really can't be blamed on the employees for skipping beta testing, management departing for greener pastures and starting production before the factory was ready, to get the product out the door as promised. Tesla has never made a deadline and i'm pretty sure it's not the line worker or sales fault.
They have a visionary CEO that just picks numbers out the air, because you have to aim high, and it's all supposed to be done by robots anyway, built by other robots. According to reports much of the firings were in sales, which is kind of weird since they're apparently at full capacity on Model S and X production lines... Hard to sell a product that's already sold out... and they're supposedly 'anti-selling' the model3 and have 'no marketing'.
One year ago: "Tesla Model 3 Production Target Is Up To 200,000 In Second Half Of 2017" .... which somehow turned into 1500 in Q3, which actually became 260... and as Model3OwnersClub said.. "the software is not finished yet" when people saw the video of the touch screen UI...
(Score: 1, Insightful) by Anonymous Coward on Sunday October 15 2017, @03:32AM (4 children)
> since they're apparently at full capacity on Model S and X production lines...
Not according to this post from July 2017 -- https://seekingalpha.com/article/4086711-teslas-new-vehicle-inventory-skyrockets [seekingalpha.com]
Goes on with more numbers and details -- claims over 8000 vehicles unsold at the end of 2nd quarter 2017.
(Score: 4, Interesting) by n1 on Sunday October 15 2017, @03:44AM
There are all sorts of skeletons in the Tesla closet, the most successful element of the business is in financial engineering. I used 'apparently' on full capacity because that's what the company claims as why they have a 100,000 target on S & X combined.
Tesla is a 'tech company' by reports and is valued as such... But is has the operational expenditure of a tech, manufacturing, retail and construction company.
They have 'amazing' gross margins on their cars, but do not include R&D of those cars, the sales and admin in selling them, despite owning their own 'service centers and galleries' as being how they're 'disrupting' the market, but do not include any of it in how they calculate their margins. Their charging network is apparently classified as marketing, so the cost of providing free charging facilities to the owners of the previous models doesn't count either.
(Score: 3, Informative) by khallow on Sunday October 15 2017, @03:44AM (2 children)
(Score: 0) by Anonymous Coward on Sunday October 15 2017, @04:13AM (1 child)
Not quite the same as traditional auto industry stuffing, since Tesla owns all the Tesla Sales Centers.
Channel stuffing includes forcing independent dealers to stock (and/or buy) extra cars, and this in turn probably involves the dealer's line of credit with their friendly bankers.
(Score: 1) by khallow on Sunday October 15 2017, @05:42AM
(Score: 1, Touché) by Anonymous Coward on Sunday October 15 2017, @04:02AM
I saw that movie. "Producers Max Bialystock and Leo Bloom make money by producing a sure-fire flop. [imdb.com]"
(Score: 2) by JoeMerchant on Sunday October 15 2017, @01:10PM
Software is never finished (thus the Soft in the name.) What the Model 3 owners have is unacceptable software, not ready for release.
🌻🌻 [google.com]
(Score: 3, Informative) by n1 on Sunday October 15 2017, @03:25AM (7 children)
To demonstrate the point about the line not being ready, as reported by one of the biggest fans of Tesla... https://electrek.co/2017/10/06/tesla-model-3-headlights-battery-seats/ [electrek.co]
They did manage to ship a record number of Model X in Q3 to make up for the lack of Model 3, but they've been recalled because of the new 'folding' rear seat.
(Score: 0) by Anonymous Coward on Sunday October 15 2017, @03:40AM
Well, from the linked Jobs page, they are currently hiring "Agile Scrum Master [taleo.net]", so that explains that. Break Early, Break Often
(Score: 5, Interesting) by bzipitidoo on Sunday October 15 2017, @03:48AM (4 children)
Makes me wonder how smart Tesla and Musk really are. I mean, condensation problem in the headlights, really? That's a very old problem. I had a 1988 Ford Escort susceptible to that. (That car was nothing but trouble, thanks to American manufacturers' shabby attitude towards little cars. Built them way too cheap. In those days, had to get Japanese to get a decent quality little car.) Fixed it myself by adding more air and drain holes.
Doesn't Tesla have any old car guys who have the long memories of automobile defects back to the 1960s, so they can avoid the mistakes made 30 years ago?
(Score: 3, Insightful) by n1 on Sunday October 15 2017, @03:54AM (1 child)
They manufacture cars, and as i'm often reminded 'the fastest production car in the world' (0-60, once or twice for 1/4 of a mile)
But with these complex 'computers on wheels' they decided to skip the beta phase this time and just go to 'early production'
Because after all, it's just a computer on wheels and the software can be updated later because no one else does 'over the air updates' on cars... it's all super secure too, because the cars can only connect to Tesla servers... Apparently later versions of the Model 3 wont require a key or other entry system either, because you can just use your phone.
http://gas2.org/2017/03/18/tesla-model-3-will-skip-beta-phase-go-directly-early-release-cars/ [gas2.org]
(Score: 0) by Anonymous Coward on Sunday October 15 2017, @08:08AM
WCPGW
(Score: 4, Interesting) by Anonymous Coward on Sunday October 15 2017, @04:25AM
> Doesn't Tesla have any old car guys...
Not too many old car guys/gals are willing to put up with the working conditions (frenetic pace) at Tesla. I know a few that tried it and quit pretty quickly. Some of the best engineers were moved to CA by Tesla, and then jumped ship to one of the other new electric car companies in the SF area.
Before Model S came out Tesla set up a Detroit Engineering Office, here's a 2007 story on the closing of that office, https://jalopnik.com/5065982/a-peek-inside-the-soon-to-be-dead-tesla-motors-detroit-office [jalopnik.com]
Then in 2008, they decided to keep a skeleton crew in the Detroit area (but not engineering),
http://www.theoaklandpress.com/article/OP/20090115/NEWS/301159971 [theoaklandpress.com]
(Score: 3, Interesting) by crafoo on Sunday October 15 2017, @12:36PM
A lot of thought and engineering go into keeping a automotive light clear of condensation. It's even harder with LED lights. You might think it's an easy problem, Tesla engineers probably did too. Like so many other things it's much more difficult to actually _do_ it than to claim it's easy and you can do it. I imagine there are thousands of such detail engineering problems on Tesla vehicles. It's fine. This is what is required to start building a new car.
(Score: 2) by JoeMerchant on Sunday October 15 2017, @01:12PM
So, he's running his car company like a web-app producer on regular release cycles.
🌻🌻 [google.com]
(Score: 5, Informative) by n1 on Sunday October 15 2017, @03:04AM (6 children)
Related...
https://www.bizjournals.com/sanjose/news/2017/09/13/tesla-diarmuid-o-connell-executive-departures-tsla.html [bizjournals.com]
A Wall Street Journal report claims at least 10 top engineers and four higher-level managers have left the autonomous technology division in recent months.
https://seekingalpha.com/article/4102017-tesla-executive-turmoil [seekingalpha.com]
(Score: 0) by Anonymous Coward on Sunday October 15 2017, @03:17AM (3 children)
I was on a car ferry a while back, and wondered what would happen if it was packed full and a Tesla car on board started on fire. As more Telas get built, and corners get potentially cut during "production hell", the chances of a real catastrophe rise. Hopefully, if there is fire danger, it reveals itself in less dangerous settings first.
(Score: 2) by n1 on Sunday October 15 2017, @03:33AM
As noted in a comment above, they're maybe only now just entering production, if you want to be kind... The current 'production cars' that have been delivered to employees and insiders are subject to component changes, including replacing batteries, seats and other 'smaller components' so far...
The cars currently 'in the wild' but presumably the owners are under NDA as employees are beta at worst, release candidate at best.
I also wonder if any of the people fired are also a customer-tester for the model3, I doubt it. The even more cynical side of me wonders if a lack of interest in a Model3 of their own contributed to their negative performance result... Not being a team player, sharing the vision of the company.
(Score: 1) by khallow on Sunday October 15 2017, @03:47AM
Probably about the same as if any other car on the ferry caught on fire. It's not a great thing to have happen, but they can drive to a port and put the fire out. Damages to the ferry and neighboring cars could be quite expensive.
(Score: 3, Funny) by GreatAuntAnesthesia on Sunday October 15 2017, @08:19PM
Yeah, I was in the supermarket the other day and I couldn't help but worry about what would happen if the lady in the queue in front of my suddenly spontaneously combusted.
These things really prey on my mind.
(Score: 2) by JoeMerchant on Sunday October 15 2017, @01:15PM
When I left a VP post it was due to differences in strategic vision with the CEO. In my case, I didn't understand the CEO's fantasy world where everything was going to work out in the end. Spoiler alert: it didn't take too long after that for the whole thing to fall apart.
🌻🌻 [google.com]
(Score: 0) by Anonymous Coward on Sunday October 15 2017, @01:47PM
So you saying that they are hiring? sweet
also all those employees are just the first mars wave that will build the substandard domes, you might say that this is evil and bad but just think about it for a second, in a few years there will be three breasted whores and we can all get some ass on mars!
(Score: 2) by looorg on Sunday October 15 2017, @06:14AM (1 child)
So was the problem that they built to few cars or that they promised that they could build more then they actually could? Someone, or a few hundred people, had to fall on the sword so Musk didn't look like a tool?
(Score: 0) by Anonymous Coward on Sunday October 15 2017, @10:30AM
So what?
(Score: 2) by Phoenix666 on Monday October 16 2017, @10:58AM
This cull should electrify the remaining workforce.
Washington DC delenda est.