Elon Musk Says Tesla Will Fix "Incorrectly Low" Severance Packages For Laid Off Employees

Elon Musk stated last week that the severance packages given to some ex-Tesla Inc. employees during the company's largest workforce reduction were incorrectly too low. 

Tesla announced on Monday that it is cutting over 10% of its 140,000-strong global workforce to prepare for a new phase of growth, according to CNBC.

Details on the layoffs were sparse, but in a company memo, Elon Musk said the move was part of a strategic shift towards robotaxi development, stepping away from plans for a more affordable electric vehicle.

Musk wrote in an email last week: “As we reorganize Tesla it has come to my attention that some severance packages are incorrectly low. My apologies for this mistake. It is being corrected immediately.”

Nico Murillo, a former production supervisor, told Bloomberg: “Tried to badge in, and the security guard took my badge and told me I was laid off. Sat in my car in disbelief.”

As we've noted, Tesla missed its Q1 delivery guidance and, so far in 2024, its stock has been decimated. For Q1 2024, Tesla produced over 433,000 vehicles and delivered 387,000. It marks the first annual Q1 delivery decline for the automaker since 2020. 

Tesla's exact delivery number for the quarter was 386,810 vehicles, far below Bloomberg estimates of 449.080.

Tesla submitted a proxy statement for its June 13 shareholder meeting this week, requesting shareholders to approve relocating the company's state of incorporation to Texas and to ratify CEO Elon Musk's 2018 pay package, which was recently rescinded by a Delaware judge.

In the statement, Tesla board chair Robyn Denholm supports the move to Texas, noting that the company has been headquartered there since December 2021., per Yahoo. 

“2024 is the year that Tesla should move home to Texas. We are asking for your vote to approve Tesla’s move from Delaware, our current state of incorporation, to a new legal home in Texas. Texas is already our business home, and we are committed to it,”  Denholm said. 

“In 2018, we asked for unbelievable growth and accomplishments. Elon delivered: Tesla’s stockholders have benefited from unprecedented growth under Elon’s leadership and Tesla has met every single one of the 2018 CEO pay package’s targets,” she continued. 

Analyst Dan Ives of Wedbush added: “On the comp package which was already approved by shareholders at the time in 2018, this has been an area of contention among some investors but we would expect the 2018 package will be reapproved and the Delaware court ruling would be moot in essence as Tesla will now be moving to Texas.”