Tesla Cuts 200 Jobs, Shuts Autopilot Office in San Mateo

Elon Musk speaks at the Automotive World News Congress at the Renaissance Center in Detroit, Michigan.

Rebecca Cook | Reuters

Tesla is closing its office in San Mateo, Calif., and cutting about 200 jobs there, CNBC confirmed, as part of the electric vehicle company’s broader cost-cutting effort.

At the San Mateo plant, hundreds of employees were tasked with tagging videos of company cars to improve their driver assistance systems, marketed as Autopilot. Bloomberg first reported on the office closure and layoffs.

Two employees affected by the layoffs told CNBC on Tuesday that they knew Tesla’s lease was coming to an end. The workers asked not to be named as they were not authorized to speak on the issue.

Tesla, which has yet to deliver on its promise of robotaxi technology, previously moved a number of its Autopilot data workers to its location in Palo Alto, California. The company has also hired and trained data annotation teams in Buffalo, New York. Some employees in the San Mateo office had trained the teams in Buffalo, staff members said.

Typical data annotation work at Tesla involves identifying and describing objects in short clips that have been captured by cameras and sensors on Tesla vehicles. Data labelers sometimes need to identify overlapping objects, such as a wheel in front of a sidewalk or a pedestrian obstructing the full view of a stop sign. They are rated on how many clips they can accurately annotate over short periods of time.

Most driver assistance and automated driving system developers outsource at least some of their data labeling work to companies like Amazon’s Mechanical Turk, Cloudfactory, Hive AI, and Appen.

An employee told CNBC that much of the San Mateo staff had expected to transfer to Palo Alto or another office, but not to lose their jobs.

CNBC also obtained an audio recording of a meeting on Tuesday, in which a manager briefed Tesla Autopilot data teams on the layoffs.

“You knew our lease was ending here in San Mateo,” the manager said. She told workers the company had done its best to try to get the entire Autopilot team from the San Mateo office to the new location in Palo Alto.

“Unfortunately we couldn’t,” she said. “So that means we have a restructuring in place and your positions have been affected.”

Employees at the meeting were told they would be paid in full for the next 60 days, but June 28 would be their last day of work. They were asked to immediately leave their laptops and badges at their desks and told that emails with information about severance and benefits would be in their inboxes.

Severance packages are expected to include compensation based on years of service with the company and an additional two months of benefits, extending coverage through October 31.

As CNBC previously reported, Tesla is in the process of reducing its salaried workforce by about 10%. However, he plans to add more hourly workers over time.

Tesla CEO Elon Musk said in an interview published last week that Tesla’s new factories in Texas and Berlin were losing “billions of dollars” in part because of supply chain disruptions that were hampering production. company’s ability to increase production at both facilities.

“Factories in Berlin and Austin are gigantic furnaces of money right now,” Musk said in the interview recorded on May 30, with a company-sanctioned fan club called Tesla Owners Silicon Valley. “It should be like a giant roar which is the sound of burning money.”

LOOK: Musk calls new factories ‘gigantic money furnaces’

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