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Tesla’s China Connection The Real Reason Elon Musk Terminating 1000 Jobs In California?


What’s The News?

Tesla has already announced last month that 7% of its workforce, which amounts to approximately 3000 employees will be fired. Now, shocking details are emerging regarding the nature of these layoffs. Click To Tweet

As reported by Mercury News, 30% of these 3000 job cuts will happen in California alone.

And unlike previous assumptions, Tesla is firing employees from their core team as well.

Earlier, it was widely reported that only those who are in non-core niches such as sales, marketing, accounts etc will be fired.

But if reports are to be believed, employees from production and manufacturing, too, are being fired from California-based factories.

What Does This Mean?

Here are some internal details of the mass-scale firing which has already begun inside Tesla, as part of their attempt to save costs, and increase revenues.

  • Tesla’s factory in Fremont, California is one of the largest automotive plans in the word, with 5.3 million sq feet of manufacturing space, and 370 acres of office space. 807 employees from this factory will be terminated.
  • Tesla has a 1.3 million sq feet warehouse in Lathrop, California. This supports the manufacturing unit in Fremont. 137 employees will be fired from here.
  • Tesla’s headquarters is located in Palo Alto. 78 employees will be fired from this location.

Among the other job titles which are being culled are – Manufacturing supervisors, Production Associates, Technicians, and some engineers.

Why Does It Matter?

The Bigger Picture: As per Elon Musk, the billionaire founder of Tesla, these job cuts of 7% of their employees have been basically done to bring down the cost of their newest Model 3.

The company aims to stabilize the cost of a Model 3 car to around $35,000, which will make it lucrative to the masses, and trigger more sales.

While announcing the job cuts, which stunned everyone, Musk had said,

“Tesla needs to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months.”

However, there is a catch here.

Some analysts believe that Elon Musk decided to terminate 3000 employees so that his company can fund their new Chinese factory.

The news about job cuts was announced in the month of June last year, and it was the same time when talks about Tesla’s first Chinese factory came up.

And on January 1st, 2019, the factory in Shanghai was inaugurated, which cost $5 billion to build, and took 4 years of time.

It would be very interesting to see how this gamble of Elon Musk will pay off in the longer run.



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