Tesla to lay off nearly 2,700 workers at Austin factory, WARN Act Notice Reveals
In a concerning blow to Austin’s workforce, Tesla has announced plans to lay off almost 2,700 employees at its local manufacturing plant, a decision disclosed through a WARN Act notice filed by the company.
Facing the Fallout
The layoff notice, representing 2,688 employees, was issued on Monday under the provisions of the Worker Adjustment and Retraining Notification Act. This law mandates companies with a workforce of more than 100 to give a 60-day prior notice in case of intended closures or mass layoffs. This preemptive action aims to safeguard the interests of employees and their dependents.
The Clock is Ticking
According to the submitted WARN Act notice, the layoffs will commence on June 14. This announcement precedes the company’s earnings call scheduled for Tuesday, where a decline in the company’s annual revenue compared to the previous year is anticipated. This expected downturn would mark the first such decrease since 2020, subsequent to layoffs, recalls, pricing adjustments, and controversy regarding a potential $56 billion compensation package for CEO Elon Musk.
“There is nothing I hate more, but it must be done,” Musk reportedly stated in an email to his team members regarding the layoffs. His implication was that trimming the workforce was necessary to ensure lean operations, conducive to innovation and a rise in growth.
Contrary Winds
This news comes as a startling contrast to earlier this month when reports had shown that Tesla’s Austin facility had swelled to a workforce of 22,777, a notable surge from 12,277 the year before. This robust increase had positioned Tesla as Austin’s major private employer, slightly surpassing H-E-B which employs around 19,000 individuals.
Global Impact
Last week it was reported via an internal company memo that Tesla was poised to cut 10% of its global workforce, a number exceeding 14,000 employees. These layoffs are a part of Tesla’s strategy to weather the poor performance experienced in 2024, marked by a 35% slump in its stock value since the start of the year and a drop in automobile deliveries.
Only last week, Tesla had to recall nearly 4,000 Cybertrucks due to a glitch forcing the accelerator to jam when pressed, heightening the chances of accidents. This recall pertains to all the Cybertrucks sold since its launch in November.
Looking Forward
With layoffs looming large on the horizon for one of Austin’s largest employers, the impact on the city’s economy, the tech industry, and the wider sector of electric vehicles will be keenly observed.