Tesla's head of product launches quits after seven years-and takes a swipe at Elon Musk on his way out the door

By Ciara Linnane

Rich Otto says job cuts are hurting morale -and he won't miss the coffee

Tesla Inc.'s head of product launches is leaving the company after nearly seven years-and taking a swipe at its leader on the way out the door.

'Great companies are made up of equal parts great people and great products, and the latter are only possible when its people are thriving. The recent layoffs that are rocking the company and its morale have thrown this harmony out of balance and it's hard to see the long game. It was time for a change.'Rich Otto, head of product launches, Tesla Inc.

Otto was referring to the recent announcement from Tesla (TSLA) Chief Executive Elon Musk that he plans to lay off 10% of the company's global workforce as he works to combat a cooling of demand and investor concerns about profits.

In April, the company sent a memo to staff announcing layoffs that was signed by Musk, and mentioned a need to get leaner and cut back on duplicative roles.

"This will enable us to be lean, innovative and hungry for the next growth phase cycle," the note said.

Since then, the company has laid off the department responsible for chargers, as the Associated Press reported. Several leaders of Tesla's Supercharger team posted social-media messages last week saying they were told that the entire group of about 500 had been laid off by Musk, who seemed to confirm the move in a posting Tuesday on X, the social-media site he now owns.

The layoffs come at a time of turmoil for Musk and Tesla, after a disappointing first-quarter delivery report earlier in April.

The electric-vehicle maker delivered 386,783 units in the period, while analysts tracked by FactSet had expected 457,000 deliveries. The performance also marked a steep decline relative to the 423,000 EVs that Tesla delivered in the first quarter of 2023.

The company is dealing with heightened competition, and the EV industry in general must contend with a cooling of demand. Tesla has cut prices at various points in the past year to spur demand, though the move has weighed on the company's margins.

Read: Why is Ford deepening its hybrid push? It comes down to one word.

There was more bad news this week when Reuters reported that U.S. prosecutors are reviewing whether the company committed securities or wire fraud by misleading investors about its self-driving capabilities.

Citing three people familiar with the matter, Reuters said the Justice Department is examining whether Tesla or Musk suggested that the company's Autopilot and Full Self-Driving systems mean cars can drive themselves. The systems assist with steering, braking and lane changes, but are not fully autonomous.

Regulators have already investigated hundreds of crashes-some fatal-involving the Tesla Autopilot system.

For more, read: U.S. prosecutors are examining whether Tesla committed securities or wire fraud in Autopilot probe: Reuters

The stock meanwhile, has been among he S&P 500's worst performers in the year to date, falling 30.4%, while the S&P 500 SPX has gained 9%.

Opinion:Why Elon Musk's latest Tesla robotaxi promise is unlikely to deliver

-Ciara Linnane

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05-09-24 1224ET

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