Inside story of layoffs: Tesla's crazy week, Musk's "unexpected decision" triggered a strategic shift

On May 11, this February, Tesla A series of meetings were held internally, Elon· Musk (Elon Musk) suddenly asked to speed up the R&D progress of the driverless taxi Robotaxiand unexpectedly announced the cancellation of the economic model of 25000 dollars under development Electric vehicle Model 2。 Although the development progress of Model 2 is one year ahead of Robotaxi, Musk decided to give priority to Robotaxi, which significantly changed the company's product strategic direction.

These measures caught Tesla's employees off guard, because although Robotaxiand Model 2 are similar in some technical details, their design goals and market positioning are different. Robotaxi aims to be durable and efficient, while Model 2 focuses on low cost and mass market. This kind of strategic adjustment is not only a great challenge to the engineering team, but also makes a profound change in the operation rhythm and future direction of the whole company.

Shortly afterwards, Tesla implemented large-scale layoffs, further increasing the uncertainty and tension within the organization.

The following is the translation

On February 28, Musk made a bold commitment to another Tesla product on his social media platform X. He posted that the new version of Roadster sports car can accelerate 100 kilometers in less than one second Almost twice as many as other mainstream models.

He wrote in another post: "I firmly believe that it is likely to become the most shocking product demonstration ever."

First of all, the members of Tesla's Roadster development team in California were shocked. They learned about this new specification from Musk's post. A former Tesla employee revealed that the team's 100km acceleration goal was 1.9 seconds. Now, they must redesign the key components of the vehicle to ensure that the battery and motor will not overheat during such a fast acceleration.

Musk's sudden announcement about Roadster was not the only unexpected decision that week. In the meeting with Tesla executives, he terminated the plan for the 25000 dollar model called Model 2, and accelerated the development of a full-service vehicle called Robotaxi Automatic driving The large-scale production plan of electric vehicles is to be realized in the second half of next year. According to several former Tesla employees, Mask has been promising to launch Model 2 for the past four years. Only a month ago, he also told investors that the car would be ready in the second half of 2025.

Musk has always been known for unexpected behavior, which sometimes brings trouble to him or his company. But even according to his standards, the events of the past 10 weeks are particularly eye-catching, making Tesla fall into the most serious crisis since 2018, when the company was trying to produce Model 3.

In April this year, Musk announced that it planned to cut more than 10% of the company's employees, including the entire department (according to a former employee, some Tesla leaders were told that the company's goal was to reduce the number of employees globally by 20%). Of the 16 executives who served one year ago, at least five have been fired or resigned, including Drew Baglino, the director of powertrain, who was once considered as a potential successor of Musk.

As part of the layoff, Musk has significantly reduced many employees and teams that analysts believe are critical to Tesla's future. For example, he dismissed the 500 person super charging station team, which was originally responsible for managing about 50000 electric vehicle charging stations and expanding the network. This network is being rapidly adopted as the industry standard by other automobile manufacturers.

The turmoil comes at a time when Tesla's share price has fallen 30% this year due to its slowing sales. For many years, consumers have been extremely enthusiastic about Tesla's electric vehicles, but now their interest in its aging models has weakened - Model 2 is designed to solve this problem. From other countries including China electric vehicle Manufacturers provide more choices, which intensifies market competition. In the first three months of this year, Tesla's sales volume decreased by 8.5% over the same period last year. Tesla, once the world's seventh largest company by market value, has now fallen to the fifteenth place.

Musk shifted his focus to Robotaxis integrating artificial intelligence rather than mass market electric vehicles, which is a huge bet for Tesla. According to several former employees, Robotaxiis far from being ready for official release. Any delay could further test the patience of Tesla investors. The chaos may further disrupt the broader electric vehicle market, where Tesla dominates in the United States, but the sales growth of electric vehicles is slowing.

This week, in the Tesla Super Factory in Austin, Texas, Tesla took amazing measures to deal with the new reality. According to a current employee, the workers responsible for the production of last year's best-selling medium-sized crossover car Model Y did not work at night for the first time, which actually halved the production of this model.

Dan Levy, an analyst in the Barclays automotive industry, said: "I don't understand what Musk wants or what he is trying to achieve. Why is there such a deep adjustment suddenly?" He speculated on the prospect of Model 2: "They may have realized that this car will never achieve its economic goals."

Tesla may face more challenges this year. In June, Tesla's shareholders will vote to decide whether to restore the $56 billion stock compensation package to Musk - the largest in the history of American companies. Tesla's board of directors initially granted Musk this award in 2018, but a judge in Delaware ruled that the award was invalid at the end of January this year. This decision angered Musk, who planned to transfer Tesla's registered place from Delaware to Texas. Musk also threatened that unless the company's board of directors found a way to increase his stake in Tesla from the current 20% to 25%, he would "develop products outside Tesla". In 2022, he sold billions of dollars of Tesla shares to acquire X.

Musk promised to show Robotaxifor the first time in early August. He promoted that this car without steering wheel or pedal will be the cornerstone of Tesla's new taxi service. This demonstration will be a critical moment for Tesla, which will either further disappoint investors or boost the stock price again.

Tesla did not respond to a request for comment on the story.

Two key meetings set a new direction

In the last week of February, two key meetings made Tesla suddenly turn around.

In the first meeting, Musk's team showed him the latest version of a new full-size economical crossover SUV prototype, which is similar to a reduced version of Model Y. This car is called Model 2. In the quarterly financial report conference call on January 24, Musk said that the car was planned to be mass produced in the second half of 2025, with a price of about 25000 dollars.

In the second meeting, Musk's team showed him an early version of the autonomous taxi Robotaxis. According to a former Tesla employee who knew about the meeting, Musk was shocked by what he saw. The team originally only wanted to arouse his interest in future products, but this product is one year behind Model 2 in engineering design. However, Musk urgently asked: Why didn't Tesla start the project immediately?

Musk has been focusing on the research and development of these two models for many years. In September 2020, in the parking lot of Tesla's Fremont factory in California, Musk and Drew Baglio, then the director of powertrain, stood in front of Tesla's owners and explained in detail how to produce a Tesla model priced at 25000 dollars by reducing the cost of the most expensive part of the electric vehicle, the battery.

Musk said that manufacturing such a car "has always been the dream of our company at the beginning of its establishment". He predicted that Tesla would deliver this car in about three years.

At the same time, Musk has always been enthusiastic about developing a fully autonomous car, which almost everyone remembers. Since 2015, Tesla has introduced Autopilot in its Model S. In 2016, he shared his vision in a declaration that one day automatic driving technology will allow Tesla car owners to rent cars when they are not using them, thus obtaining additional income. In 2019, he called these vehicles Robotaxi and promised that there would be 1 million vehicles on the road by 2020.

However, this commitment has not been realized. On the contrary, in 2020, Tesla will begin to provide the "Full Automatic Drive" (FSD) system, which is a more advanced version of its automated driving software. Although FSD does not actually realize fully automatic driving, this does not prevent Musk from promising that it will be realized soon almost every year.

According to several former employees, although there are significant differences between Model 2 and Robotaxi, according to several former employees, Tesla plans to use basically the same battery and motor on these two models and other planned models. This will significantly reduce the cost and engineering time required to design and produce these models. In 2023, the company will work intensively on a new car development plan called NV9X, where "NV" stands for "new car". NV91 and NV93 are the internal codes of the $25000 car and the Robotaxi respectively.

According to a former Tesla employee who knows about the project, the new car team plans to produce the first test version of Model 2 at the beginning of 2024, consisting of rough parts. After that, team members will begin to conduct a series of noise, vibration, cold weather and other tests on the vehicle, while making molds for the final parts, and plan to produce one or two preliminary model vehicles of Model 2 before the end of the year.

Tesla's former employees also said that the team's initial goal was very ambitious: it planned to produce 10000 Model 2 vehicles per week, or about 520000 vehicles per year, which was almost twice the speed of Model Y production in Austin at that time. The company eventually plans to produce millions of Model 2 vehicles a year at its plants in Austin and Mexico. As you know, the total production of Tesla reached 1.85 million vehicles last year.

"He drove the barge like a speedboat"

However, at the Robotaxi meeting at the end of February, Musk decided to abandon the original plan.

According to an informed former Tesla employee, Musk asked the team to start promoting the production of Robotaxion on the spot, generally following the schedule originally set for Model 2. This means that mass production of the car should begin in the second half of next year. By the end of that week, Musk's main deputies had explained to their team that, The Model 2 plan is at least temporarily suspended.

The two former employees said that a few hours later, with the news of Musk's sudden strategic adjustment spreading inside the company, the employees were very confused about how to implement these new orders. At that time, Robotaxiis just a concept, not an actual vehicle. The new car and manufacturing team will try to explore how to produce this car before the second half of 2025 in the next few weeks.

A former middle manager of Tesla said: "He (Mask) drives a barge like a speedboat!"

One of the main challenges is that although the two cars are similar in some ways, their design goals are completely different. Model 2 is a low-cost consumer car model, and it needs to look for the possibility of cost saving in all aspects during design.

contrary, Robotaxi needs to be strong and durable enough to withstand the wear and tear of years of operation. Its success or failure will depend on the operating cost per mile. Compared with Model 2, it requires less maintenance, is easy to maintain and clean, and must be equipped with a durable battery, which can be used continuously in the expected service life of 800000 km.

On April 5, news about Musk's strategic change leaked to the outside world. Reuters reported that Tesla had "canceled" the Model 2 plan and instead focused on the production of Robotaxi. Musk responded to the report on X: "Reuters (again) is lying."

But later that afternoon, he made it clear that Tesla's plans had changed. "Tesla's self driving taxi will be unveiled on August 8," he announced. The next day, Musk quoted his 2016 "Master Plan Part II" in another tweet, in which he discussed that cars like self driving taxis are the ultimate low-cost Tesla models, because people can rent them when they are not in use to make money. He did not mention Model 2.

A week later, Tesla announced company wide layoffs. In the following days, several executives left Tesla, including Baglio, who has worked in Tesla for 18 years, and Rohan Patel, the head of the company's policy and business development office in Washington.

On the Tesla financial report conference call on April 23, Musk tried to assure investors that Tesla still planned to build new low-cost models, although he said that these models would be based on the existing Tesla technology rather than the new car platform used in the previous plan. He didn't provide more details about these models.

A few days later, Musk dismissed the super charging team and dismissed Rebecca Tinucci, the team leader, and Daniel Ho, the leader of the new car development team. In a memo to the company's top management, Musk suggested that some of the executives were not quick enough to respond to staff cuts.

At present, at least one project in the charge of Tesla Supercharging Station Team has been retained for the time being. Last fall, Tesla began to build a comprehensive facility on Santa Monica Avenue in Hollywood, California, including a restaurant, a car theater and dozens of electric vehicle charging stations.

Last Monday, at the construction site of the restaurant, many bulldozers and excavators moved back and forth on the site. Six workers in orange safety vests are working. The contractor has built this round, two storey restaurant structure and installed a metal frame for outdoor movie screens.

On Tuesday night, Musk boasted the AI function of Tesla's latest FSD software on X, claiming that it would "surprise you". The link he shared was a video of a Tesla owner testing a new driving aid system. In the video, the driver's hands did not touch the steering wheel most of the time, although Tesla requires the driver to put their hands on the steering wheel after enabling the FSD function. (small)