Tesla axes hundreds of employees for 'performance' with Model 3 lagging: report

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Tesla Motors, Palo Alto, California

Tesla Motors, Palo Alto, California

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With the early months of Tesla Model 3 sales remaining at numbers lower than those promised by CEO Elon Musk, owners and advocates eagerly consume any news about electric-car maker Tesla to figure out what's happening.

Musk reaffirmed that the Model 3 is in the predicted "production hell" these days, but a report on Friday of layoffs at the Silicon Valley company attracted lots of attention.

Specifically, a report by the San Jose Mercury News that Tesla had "fired" workers, "hundreds" of them, from executives to factory workers, even as the Model 3 product rampup struggles.

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In the article, published late Friday and updated Saturday morning, Tesla employees interviewed estimated 400 to 700 people had been fired.

The layoffs came with little or no warning, they said.

Tesla refused to provide the Mercury News with the number of employees dismissed.

Tesla factory, Fremont, California

Tesla factory, Fremont, California

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In a statement provided to that paper, and this morning to Green Car Reports as well, the company said:

Like all companies, Tesla conducts an annual performance review during which a manager and employee discuss the results that were achieved, as well as how those results were achieved, during the performance period.

This includes both constructive feedback and recognition of top performers with additional compensation and equity awards, as well as promotions in many cases.

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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.

The company disputed the use of the word "layoffs," noting that it plans to replace the dismissed workers.

Tesla Model 3 found on Craigslist

Tesla Model 3 found on Craigslist

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That would indicate that the action apparently doesn't reflect a reduction in the company's overall employment—though it may temporarily reduce payroll cost on the margins.

While Tesla did not provide statistics, it suggested that its attrition rate this year is roughly similar to last year's rate.

Last month's production of Model 3 electric cars having totaled just 220 cars, far short of the 1,500 cars predicted in a July tweet by CEO Musk.

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The company's claims that it would be delivering 5,000 electric cars a week by December 31 would now seem to require little short of a Herculean effort to ramp up production.

Industry analysts now appear to be estimating the company will deliver enough Model 3 electric cars in the remaining three months of the year to get total 2017 production into the mid-thousands, virtually all of them to employees or "friends of Tesla."

Whether dismissals of hundreds of employees for performance reasons help or hurt those efforts will likely never be known.

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