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Tesla’s bad week includes racist drawings and hundreds of layoffs

Tesla layoffs, production issues

Right now, Tesla is hustling like never before to get Model 3s out the door and into customers’ driveways, in time for a self-imposed deadline of the first deliveries by the end of the month.

The last thing Tesla needs right now? Non-production-related distractions, like, say, rumors of cost-cutting layoffs and lawsuits about racist graffiti at its flagship factory.

The reports about layoffs first started with an article from the San Jose Mercury News, which reported on Friday that Tesla had dismissed 400 to 700 employees. Tesla issued a statement stressing that the layoffs were due to standard performance reviews:

“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. 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.”

However, CNBC has spoken to a number of the laid-off employees, who had a different account. They said that people were being laid off regardless of their score in a performance review (Tesla scores employees on a scale of 1 to 5). “Two laid-off employees had achieved scores at or above 4 in past performance reviews with their managers,” former workers told CNBC.  “Those terminated were generally the highest paid in their position,” another former worker said.

Of course, recently-fired employees aren’t necessarily the most reliable source of unbiased information about their former employers, but there are a number of consistent red flags between both reports. Employees who spoke to the Mercury News and to CNBC all said that the layoffs came with no warning and no details about severance, which is very much not what you’d expect from a large corporation making planned cuts based on performance reviews.

To make a bad week worse, news emerged on Monday that three former Tesla factory workers are suing the company, saying the factory is a “hostile environment” for black workers. The three allege that Tesla supervisors and other workers used racial epithets and “drew racist graffiti on cardboard boxes.”

Tesla chose to respond to the lawsuit with a weirdly downbeat statement. “Given our size, we recognize that unfortunately at times there will be cases of harassment or discrimination in corners of the company,” a spokesperson told the Mercury News, before saying that “From what we know so far, this does not seem to be such a case.”

Normally, Tesla is quick to denounce any negative report of the company. It said a reporter who published a negative piece about Model 3 production lines “has relentlessly attacked Tesla with misleading articles that, with few exceptions, push or exceed the boundaries of journalistic integrity,” before the WSJ verified elements of that journalist’s reporting.

Responding to a lawsuit alleging racist harassment with “shit happens, but right now we don’t think shit happened here, maybe” is basically a no-comment in Tesla PR land.