Tesla Fires Hundreds of Employees - Model 3 Launch Fiasco Link?

According to numerous reports, many from employees themselves, Tesla has just "fired" about 700 workers. On the surface, that would seem ill-timed at best. After all, Tesla's Model 3 deliveries last month were just one-tenth of what Elon Musk had promised. Is the now typical Tesla launch fiasco linked to the firings? Almost certainly yes and no.

A Silicon Valley newspaper, the Mercury News, says that the number fired could be as high as 700 employees. The publication also says that a spokesperson for Tesla commented on the firings, saying, “As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures. Tesla is continuing to grow and hire new employees around the world.”

Anyone familiar with the way large public companies operate should not be surprised by about 2% of a company's employees being let go on an annual basis. Frankly, the number should be higher. The Jack Welch-era General Electric model of employee review and retention says that on average about 10% of a given workforce is underperforming on any given year and should be replaced. There is a lot of logic to that. If nine of out ten of the employees doing a particular job are better than you, why should remain to drag down the team? Tesla letting go less than a thousand of its 33,000 employees for underperforming is merciful by comparison.

On the other hand, is Tesla a mature company in an environment where it can find better people in the middle of its self-named "production hell?" A company with the luxury of replacing workers during a time crunch is sort of illogical.

Those hoping to cast Tesla in a poor light may see the firing of 400 to 700 employees as a sign of trouble or a sign of cost-cutting. More likely, it is a sign that Tesla has professional managers who have the intestinal fortitude to make hard decisions in tough times.

Author Note - The author has worked for companies based in Silicon Valley and doing business in Silicon Valley, both large and public and small and private.