Business

Fired Tesla Employees Suggest Terminations Were Made For Cost Cutting Reasons

Current and former Tesla employees claimed Tuesday that the electric vehicle maker’s decision to fire hundreds of people was done to cut costs.

Poor performance likely had nothing to do with Tesla’s decision to oust scores of employees earlier this month, one former employee with the company told CNBC reporters. Others argue the move was done to cut costs for production on the Model 3.

“Seems like performance has nothing to do with it,” the person said under the condition of anonymity. “Those terminated were generally the highest paid in their position,” the employee added, suggesting that the firings were driven by cost-cutting.

One former employee, who cited internal information from a manager, estimated the company slashed between 400 and 700 administrative, sales, and manufacturing jobs. Tesla made the move despite reeling from production complications on the supposedly wallet-friendly Model 3.

The company has managed to build a mere 260 Model 3s between July and September, a number well below the 1,500 Tesla promised before the end of the fourth quarter. Total orders for the supposedly wallet-friendly vehicle tumbled to 455,000 from a high of 518,000.

Production on the highly touted vehicle was expected to expand from 100 cars in August to 1,500 in September. Tesla’s decision to fire scores of employees could complicate that agenda, as well as ignite more calls for the company to unionize.

Other employees mirrored the anonymous employee’s suggestion. Tesla’s performance review rates employees on a scale from one to five. Two of the employees who were fired achieved scores four and above in past performance reviews with their managers, they said.

A lawyer who represented AJ Vandermeyden, a female engineer who sued Tesla for sexual harassment, suggested the mass firing implies the company might be in complete disarray.

“You wonder, if they had all these bad employees making cars, do you really want to buy a Tesla now?” Therese Lawless, an employment attorney with experience suing Tesla, told reporters. “It’s very unusual to have a massive termination based on performance.”

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