Planned layoffs by Tesla (TSLA) - Get Report that have attracted news coverage to the consternation of CEO Elon Musk would not crack the top 20 layoffs in various auto and tech sectors since the start of 2016, according to Challenger, Gray & Christmas Inc. Other single rounds of layoffs in California have exceeded the 700 cuts that Musk discussed in a Wednesday earnings call.
While Tesla's layoffs may not top the charts, however, their timing amid a crunch to boost production of the Model 3 has puzzled some analysts.
"It's more of a distraction and a little surprising to have the layoffs during such a crucial period of production," said Efraim Levy of CFRA Research.
Tesla is cutting jobs as it pushes out its goal of producing 5,000 Model 3s per week from the fourth-quarter of 2017 to the first quarter of next year. While the delay is mostly attributed to bottlenecks in the manufacture of batteries and other production problems, Musk also told investors during the call that Tesla is "running out of the labor pool." He attributed the cuts to the outcome of performance reviews.
Cowen & Co. analyst Jeffrey Osborne flagged the layoffs in a note following the call. "When we asked Tesla representatives about performance reviews in 2016, the team noted they didn't have any," he wrote. "Meanwhile the company is laying off staff across the organization (and) in the same earnings call management is complaining about being production constrained because of the lack of staff in Fremont (California)."
Shares of Tesla fell 6.8% Thursday to $299.26 on news of the delays and an earnings miss. The stock is still up about 42% on the year.
Telsa is part auto-maker, part tech company and that complicates comparisons to other industry layoffs.
The largest single round of layoffs in the autos, computers, electronics and telecom industries since the start of 2016 was Intel Corp.'s (INTC) - Get Report axing of 12,000 employees in April 2016, Challenger, Gray & Christmaas reports. Next is Dell Inc.'s 10,000 cuts in January 2016, followed by another 3,000 in September 2016 related to the merger of Dell and EMC Corp.
The largest layoffs in the auto business came in December 2016 when General Motors (GM) - Get Report cut 3,300 employees. GM cut another 2,000 in November 2016 and 2,700 in April 2017. Ford (F) - Get Report made the 20th largest round of cuts with the May 2017 elimination of 1,400 jobs --double Tesla's cuts.
In Tesla's home state, the California Employment Development Department lists Verizon's (VZ) - Get Report layoff of 1,070 employees in Rancho Cordova as the largest single round of cuts this year. Verizon's Yahoo! business laid off 430 in Los Angeles, San Francisco and Sunnyvale in August. Oracle (ORCL) - Get Report laid off 964 staffers in Santa Clara and another 54 in San Diego, both in October. Oracle terminated another 441 Sana Clara employees in January. Live Nation (LYV) - Get Report laid off 905 workers in Irvine in April.
Musk criticized journalists who have written about the cuts during Tesla's earnings call on Wednesday. "Any journalist who has written articles to this effect should be ashamed of themselves for lack of journalistic integrity," he said, noting that performance reviews are standard at many companies and that Tesla's cuts represented a modest 2% of its labor force.
Musk famously referred to Apple's autonomous car effort as a "Tesla graveyard" in 2015, suggesting that engineers who couldn't make the cut at Tesla often landed at the iPhone maker.
More of What's Trending on TheStreet:
- Shark Tank Star Kevin O'Leary Says Tesla Shares Could Sink 70%
- Chipotle's Embattled CEO Still Has One Big Fan in Hedgie Bill Ackman
- Bitcoin Hits $7,000 Mark as Newborn Bitcoin Gold Faces Safety Issues
- You May Not Be Diversified Enough in Exchanged Traded Funds
Editors' pick: Originally published Nov. 2.