Tesla Lays Off Hundreds

The California-based employees were working on Tesla's Autopilot software.

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Photo: AP (AP)

Tesla is laying off hundreds of Autopilot staff, Mercedes’ CEO doesn’t think the chip shortage is ending any time soon, and Volkswagen can’t make enough batteries. All that and more in The Morning Shift for June 29, 2022.

1st Gear: Tesla Closes An Autopilot Office And Lays Off 200 People

Until yesterday, Tesla had an office in San Mateo, CA that focused on the development of Autopilot. Now that office is gone, along with over half of the employees that worked there. From the Wall Street Journal:

The company told employees Tuesday that it was closing a San Mateo, Calif., office, which had been home to staff who worked to help improve Tesla’s advanced driver-assistance system known as Autopilot, the people said. About 200 people, or more than half of the staff in that office, were told they were being let go.

Those affected include hourly and salaried staff, many of whom manually reviewed and labeled images to refine Tesla’s driver-assistance technology, which helps drivers navigate on the highway, among other functions, the people said.


If this is Elon Musk’s solution to Tesla offices being too small for his return-to-office mandates, it’s not a great one. If it’s simply a result of his bad vibes about the market, it’s even worse. At least the San Mateo office focused on Autopilot, which as we all know has been entirely perfected and needs no further development.

2nd Gear: Mercedes-Benz’s CEO Thinks The Chip Shortage Won’t End Until 2023

Volkswagen’s CEO may think the chip shortage’s end is nigh, but his counterpart at Mercedes still sees rough waters ahead. From Reuters:

The global shortage of semiconductor chips will last throughout this year and into 2023, the chief executive at premium German carmaker Mercedes-Benz (MBGn.DE) said on Wednesday.

“The semiconductor situation is very present and will be a challenge for the industry throughout this year and into next year,”CEO Ola Kaellenius said at the Reuters Automotive Europe conference in Munich.


At this point, an end to the chip shortage next year might be a blessing. Given new Covid variants that could bring the world back to March of 2020, with little global immunity, a return to normal within eighteen months would be incredible.

3rd Gear: Volkswagen’s CFO Says Battery Supply Chains Are An Issue

The EU is planning to get rid of combustion engines, and Volkswagen claims to be on board with the move. Its CFO, however, doesn’t think current battery supply chains can handle the additional demand. From Reuters:

The EU deal to phase out combustion engine cars in just over 12 years is challenging, but an more daunting obstacle will be making enough batteries to power the electric cars needed as a result, a senior Volkswagen executive said on Wednesday.


“It’s a challenging goal. We think it’s doable,” VW Chief Financial Officer Arno Antlitz told Reuters in an interview at Reuters Automotive Europe conference on Wednesday.

“The most challenging topic is not ramping up the car plants. The most challenging topic will be ramping up the battery supply chain.”

Lithium demand is through the roof and ever growing, stressing all parts of the metal’s supply chain. Battery production, which most companies (VW included) outsource to third-party suppliers, is turning into an incredibly hot market. As the kids say, watch this s

4th Gear: Toyota Had A Bad Month

Toyota makes a lot of cars, but even it feels the heat of current supply chain breakdowns. The company stockpiled chips before Covid lockdowns slashed their availability, but those reserves seem to be running dry. From Reuters:

Toyota Motor Corp’s(7203.T)global production for the first five months of 2022 fell 9.7% short of its own target on average, raising questions about whether the Japanese automaker will be able to maintain its current target for the year.

The world’s largest automaker by sales said it produced 634,940 vehicles in May, 5.3% fewer than in the same month last year and short of its target of about 700,000.


This makes three consecutive months that Toyota’s fallen behind its own production estimates, but the company hasn’t changed its year-long goals. I can relate as I too have fallen behind my productivity estimates for the past three months (I have so much laundry to do) and I will similarly not be changing my year-long goals (doing all of my laundry).

5th Gear: LG Is Rethinking Its Arizona Battery Plant

Speaking of relatable, you ever make plans to build a $1.3 billion battery plant only to have a global economic crisis show up and ruin everything? Happens to the best of us, including most recently LG. From Bloomberg:

LG Energy Solution Ltd., the world’s second-largest electric-car battery maker, is reviewing plans to build a $1.3 billion plant in Arizona as surging materials prices inflate the cost of the project.

Given “unprecedented economic conditions and investment circumstances” in the US, LG Energy is currently reviewing various investment options, the company said in response to a Chosun Ilbo report that it had decided to reconsider the project as construction costs have increased and amid concerns over weakening battery demand.


LG isn’t expected to make a final decision on the plant for another month or two, but it may come down to whether or not the company can charge more for its batteries in order to offset production costs.

Reverse: Take That, Shakespeare


Neutral: How Are You Doing?

The news the past couple weeks has been, in a word, bad. How are you holding up?