Tesla CEO Elon Musk has acknowledged an error in the severance packages sent to some of the electric vehicle maker’s laid-off workers, vowing to correct the mistake immediately. Amid a challenging economic landscape for Tesla, which includes declining deliveries and intense competition, the company has been forced to make substantial workforce reductions. In a brief internal email, Musk apologized for the severance oversight, which affected an undisclosed number of employees following Tesla’s decision to cut over 10% of its workforce—approximately 14,000 people from its 140,000-strong global team.
“As we reorganize Tesla, it has come to my attention that some severance packages are incorrectly low,” Musk said in the internal communication. “My apologies for this mistake. It is being corrected immediately.” This rare admission of error from the CEO came after Tesla employees shared experiences of being abruptly denied access to the workplace, learning of their layoffs only after being blocked from entering the buildings.
The layoffs and severance package missteps come at a time when Tesla is preparing for what Musk describes as the “next phase of growth.” The company has recently reported an 8.5% year-over-year drop in first-quarter deliveries, the first such decline since the pandemic hit in 2020, fueling concerns about Tesla’s momentum and leading to a 37% drop in share value this year as of the time of the reports.
Despite the workforce reduction and the severance debacle, Musk’s leadership and future with Tesla remain a focal point, with shareholders being asked to approve a CEO pay package for him, equivalent to the record compensation plan originally granted in 2018 but later voided by a Delaware Chancery Court. The legal scrutiny of Musk’s prior compensation package highlighted issues around board independence and a sum deemed “unfathomable” by the presiding judge, Kathaleen McCormick.
As Tesla faces these internal challenges, Musk has not confirmed whether the company will stick to his 2023 “master plan,” which proposed a sustainable global energy economy path. However, he has emphasized the necessity of scrutinizing every aspect of the company for cost reductions and productivity enhancements. The specifics regarding which departments were most affected by the restructuring will likely be disclosed in the upcoming shareholder discussions.
Relevant articles:
– Elon Musk says in email that Tesla sent ‘incorrectly low’ severance packages to some laid-off employees
– Elon Musk admits Tesla sent ‘incorrectly low’ severance packages to some laid-off employees, New York Post, Thu, 18 Apr 2024 12:40:00 GMT
– Elon Musk admits Tesla sent ‘incorrectly low’ severance package to laid off employees: ‘My apologies for…’, Mint, Thu, 18 Apr 2024 08:48:43 GMT
– Tesla To Cut 285 Jobs At Buffalo Plants; Musk Apologizes For ‘incorrectly Low’ Severance Packages, RTTNews, Thu, 18 Apr 2024 14:21:00 GMT