There is little doubt in anyone’s mind that layoffs involve internal and external conditions beyond an individual employee’s control, where firings are the result of an individual’s performance or behavior.
So one wonders why Tesla is continuing to claim that it has fired an estimated thousand-plus employees after a company-wide performance review?
Does anyone believe that a smart person like Elon Musk and his supercharged executives who revel in their stringent hiring criteria has made the same mistake over one thousand times?
Or is something else going on, something that Tesla wants to hide from their creditors, vendors, investors, potential investors, customers, potential customers, the media, and the public? Something existential or simply bad news.
There are a number of published reports suggesting that a portion of Tesla is burdened with crushing debt, overly relies on government subsidies, has possibly taken on a vision that outstrips their ability to execute, or that they will be unable to produce a profit for a longer period than originally anticipated.
What makes the characterization of Tesla’s reduction-in-force activities suspicious is that Tesla is claiming that these were firings due to a company-wide performance review and not layoffs. However, a number of the affected employees were blind-sided by their termination, suggesting that those who were terminated were not subject to the normal and customary warnings, probation, and termination procedures. Most underperforming or ill-behaved employees usually know they are about to be terminated, so there rarely is an element of complete surprise. Especially if the malfeasant behavior is well-documented.
So what’s the story?
- Is Tesla simply reducing its run rate to make its numbers look better for its investors and creditors?
- Does this move presage a major and necessary new capital raise – possibly from Chinese investors?
- Is Tesla attempting to mitigate unemployment-associated costs that may accrue by labeling the reduction in force as layoffs?
- Is Tesla trying to eliminate union organizers and activists among the chaff or a larger firing event that would mask inappropriate or illegal activity that may violate federal or state labor laws?
What is being reported …
- Tesla is behind in the production of their lower-priced electric vehicle known as the Model 3 Sedan.
- There are problems associated with its Advanced Autopilot software and hardware subsystems.
- With the exception of Space-X, Tesla is not generally thought to be profitable.
- The reasoning behind the 2016 acquisition of the unprofitable SolarCity (founded by Musk’s cousins) and its crushing debt for an estimated $2.6 BILLION has never been adequately explained.
- Tesla is seeking additional capital to build a Chinese mega-factory (and apparently willing to pay a 25% tariff to avoid technology transfer to the Chinese).
- Look for lawyers to be involved as individuals demand their performance reviews and potentially bring “wrongful termination” lawsuits.
- Look for the unions to capitalize on these firings to sell their message of “employee protection” against a heartless management.
It is hoped that Elon Musk will provide some answers to the investment community in his November 1, 2017, quarterly earnings call.
Let’s hope that the remaining Tesla employees are not distracted by the potential of a surprise announcement of their termination – and who may be planning to leave the company to seek stability elsewhere. Companies like Tesla must continually raise capital and grow, even if they are not profitable, or the weight of the chickens coming home to roost may sink the company.
I found a great article titled "Tesla is immune to bad news — here's why" which explains why Tesla apparently is not held to account like other companies.
- "Tesla has reliably produced an endless stream of bad news during the last year.
- Investors haven't cared, or haven't cared for long.
- That pattern will probably continue, short of Tesla threatening bankruptcy."
Well worth reading.