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As you’ve surely heard, Tesla has laid off 500 employees in the Supercharging division, the majority of its Supercharger team. Upon the sudden news, various reasons were put forth for why Elon Musk might have laid them all off. Reportedly, the core reason was that at a time when Musk wanted the heads of Tesla’s different business divisions to keep no more than a few critical employees and lay off the rest, Rebecca Tinucci, head of the Supercharger division, argued with him about that and didn’t lay off enough employees in her division. So, she was fired and 500 Supercharger employees were immediately laid off to show what happens when you dissent in a company that … encourages discourse, freedom of speech, and questioning the leader?
Anyway, in response to all the confusion and discussion around the topic, Musk provided the following update:
Overall, like many others, I find this decision to be a bit wild, shocking, and concerning. Though, there are pros as well as cons. I wanted to run down a list of these as I see them.
Cons?
To start off, here’s a comment from a reader: “[T]the rest of the auto industry is reeling and even talking about rolling back their NACS commitments. The Supercharger network is Tesla’s biggest competitive advantage, and knee-capping it just as it is about to become the defacto charging network for the whole country is insane.”
Another reader states: “With hundreds of millions in NEVI money on the table for chargers, with the most reliable and cost effective chargers, with your fired guy negotiating contracts with all the major and minor makers for adoption, a slowdown right now is, uh, like 4 dimensional chess dude.”
Here’s my list:
The Supercharger network has long been a critical competitive advantage for the company (our original research surveying thousands of EV owners for years has shown this, but so does common sense at this point). The network drives sales due to its breadth, reliability, and ease of use. Stalling its growth is not going to help consumer demand. Even just from a PR perspective, this hurts the Tesla brand.
Most automakers have now jumped in with Tesla on Supercharging, but, for the most part, the partnerships are hardly off the ground. Saying now “meh, we’re not going to expand as much as we have been” must provide a little bit of concern, and considering most of these automakers haven’t actually gotten EVs made yet to naturally connect to Superchargers, who knows if some might be tempted to change course? Why does it matter? Frankly, Tesla can adjust pricing on Superchargers to make this a notable profit center, and it shouldn’t be leaving a big opening for the competition to come in and compete with the network Tesla’s been building out. As another reader, Matt Fulkerson, says superbly, “Note that Tesla, if Elon would only embrace it!, has a near monopoly on reliable fast charging in North America. And can suck up costumers from other manufacturers. That Elon is now forgoing this, after making deals regarding NACS, only shows his instability.” It’s hard to even imagine arguments to that.
There are still a lot of gaps in the network. There are still a lot of places where it would be convenient and helpful to have Superchargers. Now, the team of hundreds of people who have been doing so well at filling those gaps seems to have been indiscriminately hacked off.
Overall, it just seems like a spiteful, reactionary, desperate move from a dictatorial CEO. It doesn’t seem helpful for employee morale (including manager morale and motivation) or the company’s reputation.
Pros?
To start off this section, this is an interesting one from a reader, Troy Frank: “Tesla’s charge plug (NACS) is now the standard. Tesla has started letting others use their plug/stations. Why would they continue spending a lot of resources making things better for their competitors. Better to make the rest of the industry foot more of the bill for future expansion of chargers. Tesla has already spent a ton over the last 10+ years on this.”
As Troy says, Tesla has invested a ton into this network, and now that others can basically install Superchargers with different branding but the same hardware, why not let them pick up the shovel and do the work? (One counterpoint to this, though, is that it won’t guarantee the same level of software, convenience, maintenance, or reliability. Also, as noted above, it takes away a potential profit source.)
I do actually think it’s more important for Tesla to add stalls at existing stations and ensure uptime as top priorities. I’ve driven to Orlando a few times with my Tesla, and there are tons of Supercharger stations there, but they typically don’t have a lot of stalls, so you have to sort of guess which station will be sure to have open stalls. I have had to briefly wait at stations there. If you have 40 stalls at a station instead of 10, you could be pretty sure that’s where you’re going to stop and not be messing around checking stations and availability while driving. (That said, adding stalls isn’t always possible. There are many cases where stations are maxed out in terms of either parking availability or power capacity.)
Maybe there was some bloat in the Supercharging division and it needed to be cleared out and made more efficient. (Though, the way this reportedly happened makes it sound more like a reckless mass sacking than a surgical move.)
As I reported recently (just one week ago), Tesla Supercharger stations were still growing strong in Q1. In fact, in the face of sales decline, there was a big mismatch. The number of Tesla Supercharger stations rose 26% from Q1 2023 to Q1 2024, and the number of Tesla Supercharger connectors rose 27% from Q1 2023 to Q1 2024. I even noted at the time that I was skeptical we’d see such growth in the next quarter considering all of the cost cutting Tesla was doing. Here’s what I wrote: “Frankly, percentage-wise, Tesla’s vehicle fleet did not grow nearly as much as the number of Superchargers, service vehicles, and Tesla locations did. So, that’s a great sign for anyone concerned about ongoing Supercharger and service availability. What will happen in this quarter (Q2) with Tesla cutting costs so dramatically? Will Supercharger growth, service fleet growth, and location growth all come to a halt as well? Will they plow on as they have been? Something in between?” I think we got our answer.
Table from Tesla Q1 2024 shareholder letter.
I will also note that I think Elon Musk will change course on the Supercharger plans again in the future as Tesla’s cash flow gets in better order (assuming it does get in better order). It’s sort of like what happened several years ago when Tesla ran into financial trouble and said it was closing all of its stores … before quickly changing course and growing stores again. That seemed extra nuts, while this just seems semi nuts, and as long as sales, revenue, & profit growth return, I imagine Supercharger station growth will return. That said, I have no idea how many of those ~500 laid off staff come back to help, and I’m not sure efficiently and effectively the company will get back on track with all of that experience gone.
Overall, I think this change is a case of “cutting off one’s nose to spite their face.” I do see some positives, but it feels more like a desperate move that smashes Tesla’s image, consumer demand, and growing partnerships than a well thought out and planned course change. We’ll have to see how things evolve now.
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