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, California, and cutting roughly 200 jobs there, CNBC confirmed, as part of a broader cost-cutting effort at the electric vehicle company.
At the San Mateo facility, hundreds of employees were tasked with tagging videos of the company’s cars to improve its driver assistance systems, marketed as Autopilot. Bloomberg first reported office closings and layoffs.
Two employees affected by the layoffs told CNBC on Tuesday that they knew Tesla’s lease was nearing its end. The workers asked not to be identified because they were not authorized to discuss the matter.
Tesla, which has yet to deliver on its promise of robotaxi technology, earlier moved several of its Autopilot data employees to its Palo Alto, California location. The company has also been hiring and training data entry teams in Buffalo, New York. Some employees from the San Mateo office had trained the teams in Buffalo, the employees said.
Typical data annotation work at Tesla involves identifying and describing objects in short clips that were captured by cameras and sensors in Tesla vehicles. Data taggers sometimes need to identify overlapping objects, such as a wheel in front of a curb or a pedestrian obstructing the full view of a stop sign. They are ranked based on how many clips they can accurately annotate in 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.
One employee told CNBC that many of the staff in San Mateo expected to be moved to Palo Alto or another office, but not lose their jobs.
CNBC also obtained an audio recording of a meeting Tuesday, during which a manager told Tesla’s Autopilot data teams about the layoffs.
“You knew our lease here in San Mateo was up,” the manager said. She told workers that the company went to great lengths to try to bring the entire Autopilot team that was in the San Mateo office to the new location in Palo Alto.
“Unfortunately, we couldn’t,” he said. “So what that means is that we have a restructuring going on and their positions have been affected.”
Employees at the meeting were told they would be paid in full for the next 60 days, but that June 28 would be their last day of work. They were asked to immediately put their laptops and credentials on their desks, and they were informed that they would receive emails with severance and benefits information in their inbox.
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 1. 31
As CNBC previously reported, Tesla is in the midst of cutting about 10% of its salaried workforce. However, he plans to add more hourly workers over time.
CEO of Tesla 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 due to supply chain disruptions that hampered the company’s ability to ramp up production in both facilities.
“Both the factories in Berlin and the factories in Austin are gigantic furnaces of money right now,” Musk said at the interview recorded on May 30, with a company-sanctioned fan club called Tesla Owners Silicon Valley. “It should be like a giant roar that is the sound of burning money.”