Tesla lays off hundreds of SolarCity employees as part of broader housecleaning

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Tesla has begun firing employees from its SolarCity business for performance reasons, just over a week after firing hundreds more from its motor vehicle division and in addition to an already announced round of layoffs at the solar power division. Tesla says the terminations are part of a normal performance review process, but half a dozen former employees told CNBC they were blindsided by the dismissals.

Six anonymous employees told the news channel that Tesla’s claim that the firings were based on performance reviews was impossible because no reviews had been conducted since the SolarCity was acquired by Tesla in late 2016. Tesla announced last month that it planned to lay off 205 SolarCity employees at its Roseville, California, office by the end of October, and that additional employees were fired as part of a company-wide house cleaning. According to CNBC, the dismissals extend beyond California, affecting offices in Nevada, Arizona, Utah, and elsewhere.

Three recently fired SolarCity employees (who worked in disparate city offices, and were contacted separately by CNBC) said they asked HR at Tesla for a copy of their performance reviews. But those never materialized.

The news came at an extremely delicate moment for Tesla, which is currently behind on production of its Model 3 sedan. CEO Elon Musk decided to delay the announcement of Tesla’s new Semi truck product to November to focus on getting the Model 3, which is Tesla’s most affordable and mass-market car, out the door. Last week, the Mercury Newsreported that between 400 and 700 people were fired from the company’s Palo Alto headquarters. The firings affected everyone from factory workers to engineers to managers.

THE NEWS CAME AT AN EXTREMELY DELICATE MOMENT FOR TESLA

SolarCity, a company founded by Elon Musk's cousins Lyndon and Peter Rive in 2006, was acquired for $2.6 billion by Tesla in late 2016. The deal enabled Musk to sell both electric cars and solar roofs to his customers under one corporate brand. Earlier this year, the company started installing the first of its Solar Roofs, an innovative product designed to resemble a normal roof, but contain solar panels hidden among regular tiles. Musk also is in talks with the government of Puerto Rico about rebuilding the island’s storm-battered power grid with solar power.

Tesla says the Roseville office of SolarCity will remain open with 50-plus employees, but former workers claim the office will be shut down. The company would not confirm how many employees were let go, but CNBC estimates at least 1,200 people have been fired or laid off, including SolarCity workers.

“As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures,” a spokesperson told CNBC. “Tesla is continuing to grow and hire new employees around the world."

The company will hold its quarterly earnings call November 1st, at which point Musk will no doubt discuss the effects of the dismissals on both Model 3 production and Solar Roof installation.

Correction: A previous version of this story incorrectly referred to some firings as layoffs. We apologize for the error.