Tesla Outgrowing Headquarters

JAN 2 2016 BY MARK KANE 10

Tesla's Fremont Factory

Tesla’s Fremont Factory

Tesla HQ

Tesla HQ

Tesla Motors is outgrowing its headquarters at a decent pace, according to the Wall Street Journal.

The Palo Alto-bases company already has ~14,000 employees and in December it announced that its job openings exceed 1,650.

The plan for the next several years is to add 4,500 more workers in California and even more in other places (especially at Gigafactory 1 in Nevada).

One of the main ways to recruit new employees is apparently on Twitter, as Elon Musk announced  that “hard-core software engineers” are needed for autonomous driving technologies.

As it turns out, Elon Musk’s fame helps the company not only raise capital easier, but attracts talent with less effort as well.

“Building on Mr. Musk’s fame may be a more cost-effective strategy than relying on outside firms. Fees paid to placement agencies for software engineers in the Bay Area have doubled to around $30,000 to $40,000 per employee in the past two years, said Paul Harty, president of Seven Step RPO, a recruiting outsourcing company.”

Anyways, the growing number of employees is clogging buildings and parking lots at Tesla. The Palo Alto headquarters turns out to now be too small, and as such, Tesla will need to expand. Valet services to park employee cars in the always full parking lot has already been introduced.

“I think we will be building a consolidated headquarters at some point in the future,” Mr. Musk said in September. He said the company would remain in California, but the location of a new headquarters hadn’t been determined.”

There is an interesting comparison with established luxury brands. Jaguar Land Rover with 36,000 employees sold around 500,000 cars in 2015 – roughly 13.9 cars per employee.  Tesla, on the other hand, at around 52,000 sales and 14,000 employees would be at 3.7!

The difference is huge. The Tesla cars to employees ratio is so high because sales (and plans to sell) are increasing very quickly compared to established brands (some of which are not growing at all), and due to the fact that Tesla produces a lot of its own parts (batteries, motors, charging equipment and more, as well as operates its own stores and service center)

If Tesla reaches 500,000 sales annually, it would likely employ 50,000 people or more.

Source: The Wall Street Journal

Categories: Tesla


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10 Comments on "Tesla Outgrowing Headquarters"

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13,9 vs. 3,7 cars/employee is an interesting number. However, I suspect that includes the people in the Tesla showrooms and the servicecenters. Those jobs are “outsourced” to independent dealers by the other manufacturers, and paid for dearly. So comparability is limited.
Btw “to employee” (last line) is not a verb. Just “to employ”.

Yes, interesting. One of the very few people whose posts were actually worth reading, commenting on Tesla-related articles on Seeking Alpha, was or is an engineer… I forget his or her screen name. Anyway, he/she pointed out that the car-to-employee ratio was much lower than more established auto makers, claiming that this was an indication Tesla wasn’t doing a very good job of automating its production, despite all the high-profile robots in Tesla’s Fremont plant.

Perhaps that wasn’t the entire story. Perhaps, as this article suggests, it’s more that Tesla makes more of its own sub-assemblies in-house, rather than using outside suppliers.

Or perhaps, as is often the case, the truth lies somewhere between the two viewpoints.

Vertical Integration. Building your own subsystems means those jobs are also, not outsourced. Also, the Gigafactory, is not just for the auto sector.

It’s in it’s rapid growth phase, for a startup, and there will always be a lag between your employees and your sales goal.

But vertical integration leads to a higher profit margin.

With a lack of focus and intelligence, vertical integration can also lead to higher costs and less profit as the vertical divisions have a captive customer and no competition to drive efficiency. Fortunately for Tesla, they don’t lack focus and intelligence.

Well said. Vertical integration can lead to a higher profit margin, in some or many cases, if managed correctly. But some of those parts or sub-assemblies really are gonna be less expensive if they’re imported from Taiwan or South Korea or Mexico.

Part of being a good manager or production executive will be to know what is best done in-house, and what is best purchased from a vendor.

“The Tesla cars to employees ratio is so high”

Cars to employees is equivalent to cars per employee, right?

Then Tesla have small cars to employees ration.

Tesla is ramping-up production massively.

You need to use the Dec 2015 delivery number 17400

(17400 * 12) cars / 14000 employees
=> 14.9 cars/employee

17400 cars PER QUARTER * 4 quarters per year / 14000 employees

= 5 cars per employee

At $20K margin per employee, that’s $100K profit margin per employee

Obviously Tesla is investing in their future, but right now, that profit margin per employee needs to scale in the next few years

Am I the only one to notice that there is not a single solar panel on the Tesla factory roof? I sent an email regarding same. To date, no reply.