Musk’s announcement of the August date surprised the employees, who previously weren’t expecting the robotaxi to arrive for years, one of them said.
By Becky Peterson
Apr 16, 2024, 3:16pm PDT
When Elon Musk arrived at Tesla’s Austin, Texas, factory last week to tour an expansion project on the south side of the 10-million-square-foot facility, he was furious.
The expansion was part of a high-priority project for Musk: a data center for Dojo, a supercomputer Tesla is developing. Dojo is necessary to make full self-driving capabilities, powered by artificial intelligence, a reality for Tesla’s electric vehicles. But on that day in mid-April, the building expansion was little more than a metal skeleton, still missing most of a roof and ground floor due to construction delays made worse by bad weather and delivery issues, according to two former Tesla employees.
Another hitch in the construction: The ground floor couldn't be laid until The Boring Company, Musk’s tunneling startup, completed a subterranean road under the structure, which Tesla hopes its pickup trucks—the Cybertruck—will one day use to autonomously ferry themselves to another part of the sprawling campus, one of the people said. In response to the delays, Musk fired Amir Mirshahi, the construction project’s director of infrastructure, said the two former employees, who had been briefed on his departure.
• Musk was furious about construction delays of a datacenter for Tesla’s Dojo supercomputer
• Managers were tasked with picking 20% of their employees to be considered for layoffs
• Tesla halted production of a new Model Y battery pack before battery executive Drew Baglino’s departureThe Takeaway
Musk’s dissatisfaction with the state of the project came at a delicate moment for Tesla, when demand for its vehicles has slumped and investors are punishing its stock. The downturn seems to have prompted Musk to swing into action over the past couple of weeks at Tesla at a time when his critics say he needs to devote more time to the carmaker and spend less of it at his many other companies, including X and SpaceX.
Musk’s most decisive action came Monday when he announced the layoffs of more than 10% of the company’s staff, which totaled over 140,000 employees at the end of 2023. There are signs the cuts could eventually go much deeper: Last week, Tesla managers were asked to provide the company with a list of 20% of their employees to consider for layoffs, said a former employee involved in those discussions.
Several other Tesla executives also announced their departures from the company on Monday, including one of Tesla’s most senior executives, Drew Baglino, senior vice president of powertrain and energy engineering, and Rohan Patel, vice president of public policy and business development.
At the same time, Musk has sought to counter fears that cutbacks at the company are compromising projects that could fuel future growth. For example, he recently suspended plans to produce a long-promised $25,000 consumer vehicle, said two of the former employees. (Musk denied a Reuters report on April 5 that Tesla had canceled the project).
He then said that Tesla will unveil another new vehicle on August 8, which the company refers to as a robotaxi. Although Musk didn’t share details of the car, he has said in the past that fully autonomous Teslas will allow their owners to earn income by giving rides to other passengers. Musk’s announcement of the August date surprised the employees, who previously weren’t expecting the robotaxi to arrive for years, one of them said. The vehicle—which will not have a steering wheel, according to a biography of Elon Musk by Walter Isaacson—is expected to face many regulatory hurdles before its release.
It wouldn’t be the first time Musk has announced a new product long before it was finished. Musk unveiled Tesla’s Cybertruck in 2019, promising production by 2021 at a price of $39,900. In reality, Tesla delivered the first Cybertrucks at the end of 2023, with the first batch of cars priced between $80,000 and $100,000.
The company has also faced significant legal and consumer pushback against its full self-driving technology, a driver assistance product first released in beta in 2020, the name of which suggested it made cars fully autonomous. On its website, Tesla now clarifies that the technology requires “active driver supervision” and does “not make the vehicle autonomous.”
In the case of Dojo, Musk’s ambitions are mixed with ambivalence. While he said Tesla will spend $1 billion building Dojo in 2024, he told Wall Street in January that Dojo is “a long shot worth taking because the payoff is potentially very high. But it’s not something that is a high probability.” Tesla still currently relies on Nvidia chips to run its existing artificial intelligence.
These future products are especially important for the company now, as unsold Teslas pile up. The company recently said sales of Tesla vehicles fell more than 9% in the first quarter of 2024, compared to the same period last year.
That marked the end of years of growth as the company is now grappling with an aging vehicle lineup and growing competition in the EV market. That competition is especially fierce in China—a giant market Tesla has invested heavily in—where rivals like BYD have surged on sales of low-cost EVs. To attract more buyers, Tesla has slashed the prices on its most popular vehicles thousands of dollars in some cases.
Collectively, the issues have rattled the faith of Tesla investors. Its shares have fallen more than 9% in the past five days and are down nearly 37% from the start of the year.
“The Street wants and NEEDS answers next week on Tesla's 1Q conference call next Tuesday, April 23rd after the bell as the string of bad news over the last few months has been a horror show for investors in the Tesla story,” Wedbush Securities analyst Daniel Ives said in a research note on Monday.
Tesla has hit plenty of rough patches before. It last laid off 10% of its salaried workforce in 2022, and it has done smaller and more targeted reductions in head counts in the months since. Musk described Monday’s layoffs as par for the course. “About every 5 years, we need to reorganize and streamline the company for the next phase of growth,” he wrote in a post on X on Monday.
Many employees found out about the latest round of layoffs through an email from Musk early Monday morning. But there were earlier signs of tightening budgets. For several weeks, Tesla managers had told employees to curb all nonessential travel and to return company-issued cellphones they weren’t using, two of the former employees said.
While some employees were told not to worry about layoffs, they saw some concerning signs. Major projects run by Baglino faced issues in recent months, two of the people said. Baglino oversaw planning for a factory that will make cathodes, a component of the batteries that go inside Tesla's vehicles, which had fallen behind schedule, the former employees said. The leader of that project, Anthony Thurston, was also laid off, he announced on Monday.
A second project led by Baglino—to redesign the battery pack for Tesla’s Model Y—fell apart in late 2023. Tesla decommissioned the assembly line that produced the part, known as a structural battery pack, in December and has started to dismantle the line to use the parts on other projects, one of the former employees said.
For some longtime Tesla employees, the biggest harbinger of change to come came in the appearance at the company of Omead Afshar, a longtime lieutenant of Musk who oversaw the construction of the Texas factory. In 2022, after Tesla investigated his use of company resources, Afshar moved to SpaceX and was rarely seen around the factory. A few weeks before the layoffs, though, one person described seeing Afshar appear in the factory lobby, raising questions among some employees about what Musk’s fixer might be back around to fix.
Becky Peterson is a reporter at The Information based in New York City covering Tesla, SpaceX and all things Elon Musk. Contact her at
[email protected].
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