Tesla recently announced a layoff of 285 employees in the state of New York as part of a broader restructuring effort. The majority of these employees were based at the company’s Buffalo factory, with a few in a nearby store and service center. CEO Elon Musk sent a company-wide memo earlier in the week stating that more than 10% of the global workforce would be reduced, with the goal of preparing the company for a “next phase of growth.” This move represents a 14% reduction in headcount at the Buffalo location.
The Buffalo factory was acquired by Tesla in 2017 as part of a $2.6 billion deal with solar installer SolarCity. This acquisition was met with criticism, with some viewing it as a bailout for a struggling solar business. SolarCity, which was founded by Musk’s cousins, had deep ties to the Tesla CEO and board. If SolarCity had gone bankrupt, Musk’s other company, SpaceX, would have lost its investment in SolarCity bonds. Additionally, around $1 billion in taxpayer funds were used to build the Buffalo factory, with the promise of creating thousands of high-tech jobs in the region.
Although Tesla stated its intention to manufacture solar panels at the Buffalo factory, its solar business has faced challenges in recent years. Solar deployments by Tesla declined to 223 megawatts in 2023, a 36% decrease from the previous year. This marked the lowest level of solar deployments for Tesla since 2020. Despite these challenges, Tesla’s energy division continues to generate revenue through sales of backup batteries, used in various projects.
In light of these changes, Tesla has shifted its focus and strategy in Buffalo. Instead of manufacturing solar panels as originally planned, the company now assembles Supercharger equipment at the factory. Part of its Autopilot data labeling team has also been moved to the Buffalo location. Additionally, Tesla has announced plans to build supercomputer hardware in Buffalo. Reuters reported that Tesla is now focusing on robotaxi technology and has abandoned plans for a more affordable EV.
Looking ahead, Tesla has yet to confirm whether it will proceed with its 2023 “master plan,” which outlined a path to achieving a sustainable global energy economy through electrification and sustainable electricity generation. The company plans to discuss its first-quarter results with shareholders on April 23, where executives are expected to provide more details on the restructuring and future strategy moving forward.
Tesla’s recent layoffs and restructuring in New York signal a shift in the company’s direction and priorities. As the company navigates challenges in its solar business and explores new technologies, it remains to be seen how these changes will impact Tesla’s overall trajectory in the coming years.
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