Will staff layoff become a bane for Tesla?

Tesla's plan to layoff 10 per cent of its employees has come as a boon for American carmakers Rivian Automotive and Lucid Motors, which are hiring talent from these laid off staff and could this ultimately become a bane for Tesla?

Now, rivals are looking to rev up their electric vehicle (EV) offerings in the US and Tesla’s current and former employees are clearly on their radar.

Tesla must devise a strategy to retain talent.

This 10 per cent sacking could leave the current employees disgruntled and it may prompt them to move to greener pastures (read EV and tech companies).

And, the growing opportunities in the electric vehicle space would open up a whole new world for these Tesla experts.

Even Big Techs, including Apple, Amazon and Google, are reaping benefits from the pink slips handed out by Tesla. In fact, they are hiring dozens of Tesla’s former staff members.

 

Around 90 of Tesla’s former employees found new jobs at rivals Rivian and Lucid —56 in Rivian and 34 in Lucid. Surprisingly, only eight joined traditional car giants such as Ford and General Motors.

From now onwards, if Tesla hands over any further pink slips, Big Techs and others will wait with bated breath to grab those who have been laid off. Tesla’s plan to cut flab will only benefit rival companies.

 

This is something the Elon Musk firm must realise and not allow others to benefit. Also, layoffs may lead to disgruntlement and result in mass resignations. If this continues, Tesla may be in trouble, big time.    

 

Tesla, which identifies itself as a tech company rather than a car maker, saw 179 of 457 former employees join tech firms. They include Apple (over 50), Amazon (same), Google (30), Meta (25) and Microsoft (25).

Apple is also seeking to enter the EV race, and hence, the demand for Tesla executives could be even more. The 50-odd employees were hired for Apple’s Titan project.

 

Tesla executives also found greener pastures in firms such as Redwood materials, a battery recycling firm headed by Tesla co-founder JB Straubel. Also, Zoox, an Amazon-backed vehicle start-up, appoints Tesla executives.

 

In June, Elon Musk had informed employees that Tesla may need to reduce its headcount by 10 per cent in the next few months. He added that the overall headcount could actually go up in about a year’s time.

Since then, Tesla started to pare jobs in various departments. This includes its Autopilot team. Tesla also shut its San Mateo office in California, asking 200 of its workers to leave.

Tesla must realise that the electric vehicle space is growing exponentially and all car companies are in the fray to manufacture and sell these eco-friendly vehicles. 

It would only be in Tesla’s interest to retain its talented employees, if it wants to remain the undisputed leader in the electric vehicle segment for long.

 

But if Tesla doesn’t come up with policies to retain talent, and if it goes for layoffs in the near-to-medium term, it may lose out big time as the highly-competitive EV ecosystem is waiting to grab these talented people.