In January of this year, CEO Elon Musk sent an email to all Tesla employees (the content of which was also shared with the SEC and the public) informing them of a plan to cut the company’s workforce by 7% in the coming months. In the following weeks, more details emerged detailing the nature of those cuts. In February, with an announcement of the availability of the $35,000 Model 3, Tesla highlighted its plan to shift to an online-only sales approach, closing the majority of its physical locations and reducing headcount in sales.
At the same time, it announced that it would be investing further in Tesla’s customer service, including significant increases in headcount.
However, despite this announcement, the company has not yet shown signs of dramatic hiring efforts for employees in customer service.
Tesla – Customer Service Employee Headcount over Time
Source: Revelio Labs
Of the firm’s nearly 41,000 employees, only 1,300 are in Customer Service roles. That number is up by about 8% since the start of this year, but growth in customer service headcount has not kept pace with the firm’s rapidly increasing vehicle deliveries. Given Tesla’s policy of sending acustomer service representative to a client for services, delivering quality service has been a constant challenge for the company. With more and more Tesla vehicles on the road each day, these numbers bring into question whether the firm has been so focused on getting vehicles out the factory doors that it has neglected to focus on building the capabilities it needs to provide ongoing service for those vehicles.
Another important aspect of the company’s growth plan — increasing its presence in Eastern Asia and in particular in China — also shows signs of weakness. Of Tesla’s roughly 40,000 employees, only 1,000 of them are located in Eastern Asia, which includes both China and Japan.
Tesla – Top 5 Regions by Headcount (as of July 2019)
Source: Revelio Labs
So, roughly 2% of Tesla employees are located in Eastern Asia, despite the Chinese market accounting for roughly 10% of the company’s revenues.
Tesla – Sales by Geographic Area
Source: Tesla 10-Q, 2Q19
Most of those 1,000 employees are in Sales or Customer Service roles, and despite a projected opening of the Shanghai Gigafactory later this year, the company has not been seen hiring large numbers of people in the technical or manufacturing roles that would be expected to be housed at that location. As mentioned in Revelio Labs’ research on Netflix, the lack of significant numbers of employees located outside the United States begs the question of whether or not the company can execute on its global expansion strategy without having boots on the ground overseas.