Here is where Tesla is laying off 700 workers in Nevada. Will it affect incentives?

Reports of a massive layoff by Tesla in Northern Nevada are officially confirmed after the company officially filed a notice with the state.

Tesla notified Nevada of its plans to lay off 693 employees at various locations in the area as part of the Worker Adjustment and Retraining Notification Act. The WARN Act requires employers to provide notification 60 days in advance when laying off 100 or more workers.

The layoffs are effective June 14, according to the notice.

The large number of employees affected by the layoffs also raises questions about the impact on $1.3 billion in incentives that Tesla has negotiated with the state of Nevada. Here are some key questions about Tesla’s latest round of layoffs, why they’re happening and how they impact Tesla’s abatements.

Where is Tesla laying off employees in Northern Nevada?

Tesla “will permanently layoff” workers at five locations in Northern Nevada, including Sparks and Storey County, according to a letter from the company that was acquired by the Reno Gazette Journal.

The layoffs were detailed in a letter sent by Tesla to the state on April 24, which supersedes an earlier letter it sent on April 19.

The bulk of the layoffs will be at the Nevada Gigafactory or “Gigafactory 1” — the first of five Gigafactory sites that Tesla has around the world.

Here is where Tesla layoffs are occurring in Nevada:

• Gigafactory Nevada: 668 employees
• 550 Milan Drive, Sparks: 19
• 680 E. Glendale Ave., Sparks: 4
• 1700 Milan Drive, Sparks: 1
• 700 Milan Drive, Sparks: 1

The terminations will occur during a 14-day period starting on June 14, according to Tesla.

Why is Tesla laying off employees?

The layoffs are part of Tesla’s plans to cut 10% of its workforce globally.

The staffing cuts were detailed by CEO Elon Musk in an email sent to employees earlier this month and first obtained by news site Electrek .

Musk pointed to the company’s rapid growth, which included the construction of several factories worldwide, as a big factor in the layoffs.

“With this rapid growth there has been duplication of roles and job functions in certain areas,” Musk wrote.

“As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity.”

In addition to the Nevada Gigafactory, the layoffs are also affecting other sites. Tesla’s Austin operations — which also include a Gigafactory — will be seeing even larger layoffs at 2,688 employees, according to the WARN notice sent by Tesla to the state of Texas.

Do the Tesla layoffs affect any union workers?

Unlike the Big Three automakers in the United States — Ford, Chevrolet and Stellants, which was formerly known as Chrysler — Tesla employees are not unionized.

In its notification letter, Tesla confirmed that none of the employees affected by the layoffs are represented by a union.

Tesla added that the laid off employees do not have “bumping rights.” Bumping rights refer to a senior employee taking over a junior employee’s position instead of being laid off.

Will layoffs at the Nevada Gigafactory affect Tesla’s $1.3 billion incentive package?

In exchange for its decision to pick Nevada as the site of its first Gigafactory , the state granted Tesla $1.3 billion in incentives.

The incentives include more than a billion dollars worth of tax abatements and nearly $200 million in tax credits over 10 years.

“Tesla’s Nevada abatements are premised on the company making a $3.5 billion investment, in the state, within 10 years,” the Nevada Governor’s Office of Economic Development said in response to an RGJ query about the layoffs.

“If a company does not meet the criteria of the abatement, their tax incentives are adjusted accordingly.”

Tesla is also required to meet a certain staffing and salary threshold as part of its incentive deal. Back in 2014, Tesla pledged to hire 6,500 employees at an average salary of $26.16 per hour.

The company more than met those goals, according to Gov. Joe Lombardo.

“Tesla has far exceeded every promise they made going back to 2014,” Lombardo said last year in March.

“To date, they have invested $6.2 billion in Nevada, built a 5.4 million-square-foot Gigafactory which provided 17,000 local construction jobs and created more than 11,000 highly paid permanent jobs.”

In response to a request for Tesla’s latest employee numbers, GOED referred to the company’s annual report from September last year.

In its 2023 annual report, Tesla stated that it crossed the $6.5 billion threshold for capital investment for the fiscal year that ended last June. The company reported 8,908 qualified employees in Nevada at the end of the 2023 fiscal year prior to the layoffs. Here is a breakdown of Tesla’s employee numbers in Nevada by the end of the 2023 fiscal year, which also included Panasonic and battery component manufacturer H&T:

• Tesla: 5,355
• Panasonic: 3,330
• H&T Nevada, LLC: 223

The company also reported paying $4.2 billion in total wages to the aforementioned employees, which equates to $42.04 per hour. The wages include executives and management.

Tesla applied for the incentives in October 2014 so the deal is in its last year.

Will the Tesla layoffs affect the company’s incentives for its electric semi truck facility?

In March last year, Tesla was approved by Nevada to receive more than $330 million in incentives for a new manufacturing facility .

In addition to manufacturing batteries, the facility will also make Tesla’s electric semi truck.

As part of the company’s deal with the state of Nevada, Tesla pledged to invest $3.6 billion in the facility and hire 3,000 workers at an average hourly wage of $33.49.

The electric semi truck facility, which is still under development, is an expansion of the existing Gigafactory and is not part of the original incentive agreement.

This article originally appeared on Reno Gazette Journal: Here is where Tesla is laying off 700 workers in Nevada. Will it affect incentives?