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The inside story of Elon Musk’s mass firings of Tesla Supercharger staff

[May 15, 2024] By Chris Kirkham, Hyunjoo Jin and Abhirup Roy

(Reuters) - The day before Elon Musk fired virtually all of Tesla’s electric-vehicle charging division last month, they had high hopes as charging chief Rebecca Tinucci went to meet with Musk about the network’s future, four former charging-network staffers told Reuters.

After Tinucci had cut between 15% and 20% of staffers two weeks earlier, part of much wider layoffs, they believed Musk would affirm plans for a massive charging-network expansion.

The meeting could not have gone worse. Musk, the employees said, was not pleased with Tinucci’s presentation and wanted more layoffs. When she balked, saying deeper cuts would undermine charging-business fundamentals, he responded by firing her and her entire 500-member team.

The departures have upended a network widely viewed as a signature Tesla achievement and a key driver of its EV sales. Tesla Superchargers account for more than 60% of U.S. high-speed charging ports, federal statistics show, and the company has been the biggest winner so far of $5 billion in federal funding for new chargers.

This account, the most detailed to date on the Supercharger firings and the fallout, is based on interviews with eight former charging-division employees, one contractor and a Tesla email sent to outside vendors. Only Musk and Tinucci were in the meeting described to Reuters; the four sources with knowledge of the meeting are relaying what they heard about it from Supercharger department managers.

Tesla, Musk and Tinucci did not respond to requests for comment from Reuters.

Despite the mass firings, Musk has since posted on social media promising to continue expanding the network. But three former charging-team employees told Reuters they have been fielding calls from vendors, contractors and electric utilities, some of which had spent millions of dollars on equipment and infrastructure to help build out Tesla’s network.

A letter sent earlier this month by a Tesla global-supply manager to Supercharger contractors and suppliers instructed them to “please hold on breaking ground on any newly awarded construction projects” and halt materials purchases, according to a copy reviewed by Reuters. “I understand that this period of change may be challenging, and that patience is not easy when expecting to be paid!”

Tesla's energy team, which sells solar and battery-storage products for homes and businesses, was tasked with taking over Superchargers and calling some partners to close out ongoing charger-construction projects, said three of the former Tesla employees.

One construction contractor said Tesla staffers contacting his company since the layoffs “don’t know a thing.” The contractor said he had expected Supercharger projects to provide about 20% of his 2024 revenue but now plans to diversify to avoid relying on Tesla.

Tinucci was one of few high-ranking female Tesla executives. She recently started reporting directly to Musk, following the departure of battery-and-energy chief Drew Baglino, according to four former Supercharger-team staffers. They said Baglino had historically overseen the charging department without much involvement from Musk.

The charging-team layoffs mark the latest drama in a tumultuous year for Tesla as Musk has shut down or delayed several core efforts meant to drive the rapid EV sales growth that investors have expected. Instead, Musk now says Tesla will shift its main focus to self-driving cars, a fiercely competitive and riskier business that could take years to develop.

The company posted its first decline in auto sales since 2020 in the first quarter amid fierce competition from Chinese electric-vehicle makers and sagging worldwide EV demand. Reuters reported in April that Tesla had scrapped plans for a long-awaited affordable car known as the Model 2. That has thrown into doubt Tesla’s plans for new factories in Mexico and India, where Musk had been expected to travel last month to meet Prime Minister Narendra Modi, before canceling at the last minute. And a host of executives have departed amid deep companywide layoffs.

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Tesla electric vehicle chargers are seen during the winter in Hofn, Iceland, February 16, 2022. REUTERS/Nacho Doce/File Photo

SCALED-BACK CHARGING EXPANSION

The energy team that was assigned to take over charging-network management has some similar design and construction roles, two of the former Tesla employees said. But charging projects are fundamentally different because they are located in public places and require extensive negotiations with utilities, local governments and landowners, they said.

The energy team was already struggling to keep pace with its current workload, said two of the former charging-network staffers. Yet when the layoffs came down on April 30, Musk posted that the company “still plans to grow the Supercharger network, just at a slower pace.” On Friday, Musk posted that “Tesla will spend well over $500M expanding our Supercharger network to create thousands of NEW chargers this year.”

Two former Supercharger staffers called the $500 million expansion budget a significant reduction from what the team had planned for 2024 - but nonetheless a challenge requiring hundreds of employees. In an analysis provided to Reuters, San Francisco research firm EVAdoption estimated a $500 million investment this year would translate to Tesla building 77% fewer charging ports per month in the United States compared with the automaker’s pace through April.

‘HOLDING THE BAG’

Tesla unveiled its first Supercharger stations throughout California in 2012, with Musk calling the network a “game changer” for EVs that would enable long-distance travel and convenience “equivalent to gasoline cars.”

The EV-charging business requires substantial upfront investment, and analysts have often viewed it as unprofitable. But Tesla’s network had been profitable before the layoffs, according to four former Tesla employees familiar with the division’s financial performance.

That owed to Tesla’s cost-control and extensive analysis to choose locations that could draw business throughout the day rather than only during peak-demand times, when electricity costs spike. One former Supercharger staffer said Tesla’s costs per-charging-port were typically at least 50% lower than those of competitors.

As recently as last month, Tesla said in a securities filing that it needed to expand charging to “ensure adequate availability” for customers, particularly after automakers including Ford, General Motors, Toyota and Hyundai announced they would start making their cars compatible with Tesla’s charging plugs, giving their vehicles Supercharger access.

Another former employee said that rollout is “completely jeopardized” because there will not be enough new charging sites coming online, and the company was only starting to implement upgrades to allow more compatibility with other manufacturers’ vehicles.

Three of the former employees called the firings a major setback to U.S. charging expansion because of the relationships Tesla employees had built with suppliers and electric utilities. Tesla had grown into one of the larger customers for many major utilities around the country, and many had hired new staff and planned new infrastructure based on Tesla’s charging-network expansion plans, the former employees said.

Other companies may be able to fill the gap, the former employees said, but the goodwill built over time with utilities and other contractors from Tesla’s large-scale charging investments will be difficult to replicate.

“It’s just unfortunate that now they’re stuck holding the bag on all these different projects,” one of the former employees said. “It’s really sad to see all these relationships burned and people be really angry - rightfully so."

(Reporting by Chris Kirkham in Los Angeles, and Hyunjoo Jin and Abhirup Roy in San Francisco; Edited by Brian Thevenot and Matthew Lewis)

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