Company-wide layoffs will affect multiple employees at its South Buffalo site, with 285 individuals slated for layoffs across Tesla facilities in Western New York.

Per a WARN notice from the Department of Labor, Tesla plans to lay off 285 out of its 2,032 employees in South Buffalo, constituting approximately 14% of its local workforce. The majority of these cuts, totaling 280, will occur at the Gigafactory located on South Park Avenue, and five further reductions will come from the gallery and service center across the street, which has yet to open.

Tesla's CEO, Elon Musk, distributed a memo to all employees earlier this week, announcing plans to cut around 10% of the company's global workforce to prepare for the next growth phase.

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The SolarCity's Acquisition in 2017

The Buffalo factory was acquired after Tesla completed a $2.6 billion acquisition of solar installer SolarCity in 2017, which then faced widespread criticism and was viewed as a bailout for a struggling solar business closely connected to Tesla's CEO and board. Elon Musk, who founded and co-founded SolarCity with his cousins Lyndon and Peter Rive, also served as its chairman. Another company owned by Musk, SpaceX, had invested in SolarCity bonds, which would have also incurred losses on its investment had it gone bankrupt.

The Buffalo Factory's Years of Challenges

Empire State taxpayers invested approximately $1 billion to construct the Buffalo factory, which included equipment purchases, with the expectation of fostering the creation of numerous high-tech jobs in the area. Although Tesla initially announced plans to produce solar panels at the Buffalo factory, its endeavors to expand its solar business have encountered challenges over the years.

Tesla's solar deployments decreased to 223 megawatts in 2023, a 36% decline from the previous year's 348 megawatts. This represented the lowest level of Tesla's solar deployments since 2020 when they reported 205 megawatts.

Tesla's energy division primarily derives revenue from the sales of backup batteries, also known as battery energy storage systems, utilized in residential, commercial, and utility-scale projects.

Musk Shifting Priorities for Autonomy

Tesla now assembles Supercharger equipment at the facility rather than focusing on manufacturing solar panels as its main operation in Buffalo. It relocated a portion of its Autopilot data labeling team and also informed shareholders of its plans to manufacture supercomputer hardware at the site.

Reuters reported earlier this month that Tesla would shift its focus to robotaxi technology and abandon plans to manufacture a more affordable electric vehicle. Musk wrote in a post on his social network X Tuesday afternoon that he is not quite betting on the company but going all out for autonomy.

Tesla has yet to confirm whether it will adhere to its 2023 master plan, which outlined a proposed path toward achieving a sustainable global energy economy through end-use electrification and sustainable electricity generation and storage. The company's first-quarter results with shareholders are intended to be discussed on April 23, during which executives are anticipated to provide further details regarding the restructuring and future strategy.

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