Few people saw the layoffs at Tesla’s Supercharging team coming. But when it happened, it struck the entire auto industry like a bolt of lightning. When some 500 Tesla employees sifted through their emails on Tuesday morning, they all read something they wish they never had to: “You’re being let go.” Those might not have been the exact words, but that’s exactly what happened. And now analysts predict that Tesla’s move threatens the EV transition.

Welcome to Critical Materials, your daily round-up of news and events shaping the burgeoning EV industry. Today, we’ll expand on how a slower expansion of the Tesla Supercharger network can put the entire U.S. EV industry in peril, Rivian adding hundreds of new manufacturing jobs at its Illinois plant to produce the R2 electric crossover and Mercedes-Benz attempting to slow down a labor-organizing effort in Alabama with a leadership change.

30%: Tesla Supercharger Layoffs Threaten EV Transition

Industry experts and analysts are scratching their heads over Tesla’s decision. The brand isn’t famous for transparent communication, so all we’re left with is hearing from former employees and a predictive analysis of what made the company dismiss the backbone of its charging empire and the consequences of that.

Research firm BloombergNEF found that North America needs close to half a million DC fast chargers to support 40 million BEVs by the decade’s end. Without Tesla, there’s no immediate answer to how that goal would be achieved.

Here’s an excerpt from Bloomberg this morning:

BNEF forecast in its Long-Term Electric Vehicle Outlook that there need to be around 400,000 ultra-fast chargers in North America to serve a fleet of 40 million battery-electric vehicles by 2030, and lay the foundation for over 90 million EVs just five years later.

Charging is a different story in Europe, where Tesla’s slowdown won’t be felt as strongly. A total of 390 companies added more than 13,000 ultra-fast chargers in the first quarter, which was 11 times greater than Tesla’s installations.

Perhaps Musk is betting that the North American charging industry will look more like Europe’s in the years to come, and isn’t inclined to commit the capital required to keep growing the network at pace in an increasingly crowded market.

The lion’s share of public DC fast chargers in North America belongs to Tesla. In the first quarter of 2024, the company installed a record 3,680 Superchargers in the region, more than double the combined installations of rival charging companies.

A couple of years ago, Musk said that Tesla’s charging business could attain a 10% profit margin. But BNEF forecasts put that figure down to 8%, or about 740 million in annual earnings by the decade’s end.

That supports the theory that Musk’s profitability targets could be unattainable. It could be why he wants to reallocate those resources to artificial intelligence and robotaxis. There’s little evidence—apart from investor confidence—that those two things are the need of the hour.

While the CEO continues fixating on the great replacement theory and woke mind virus, it’s an opportune moment for others to catch up.

Several partnerships have announced investments in charging lately. That includes Ionna, a consortium of seven major automakers who have pledged to deploy 30,000 fast chargers in North America. Automakers also have plans to build out chargers. To name a few, Mercedes-Benz High Power Charging Network is amidst an expansion spree and General Motors is also building thousands of charging stations in collaboration with EVgo.

Tesla hitting the brakes on Superchargers could indeed threaten the EV industry. However, the future of charging can still be bright if others pull up their sleeves and take matters seriously.  

60%: Rivian Lays Groundwork To Make R2 A Reality

Over at Rivian, things seem far more optimistic. The California start-up showcased three new EVs in March: the R2 crossover, the R3 hatchback and its rally-styled R3X sibling. The R3’s design sparked an instant love affair among fans without even knowing its arrival year or date.

At least one of those cars, the R2, is on track to become a reality. The brand announced yesterday that it had received $827 million in state incentives to expand its manufacturing base in Normal, Illinois. We’re learning from Automotive News that the funding would also create 500 new jobs to produce the R2.

Amidst an ongoing bloodbath in tech jobs, worsened by the Tesla layoffs, Rivian’s hiring should present a fresh opportunity for some workers. It will also help Rivian get its R2 project off the ground and bring a comparatively more affordable electric SUV to a broader audience.

Rivian initially planned to build the crossover at a new plant in Georgia after the state offered $5 billion in incentives. That project was expected to generate some 7,500 jobs, boost the local economy and help Rivian diversify its manufacturing bases. But Rivian paused that plan amidst industry headwinds and decided to build the R2 in Illinois.

There’s more to come from Rivian in the coming months and years. “We’re not abandoning Georgia,” a Rivian official told the Atlanta Journal Constitution recently.

90%: Mercedes Plant Gets New CEO Amidst Labor Tensions

Mercedes-Benz U.S. International, which operates the German automaker’s U.S. factory in Alabama, announced a new CEO this week. CEO Michael Goebel handed over his role to the group’s vice president of operations, Federico Kochlowski.

Kochlowski now helms the plant that employs 6,100 workers and manufactures models like the EQE SUV, EQS SUV and Mercedes-Maybach EQS SUV and their gas-powered counterparts for North American and global markets.

This leadership change is intended to dampen a labor-organizing effort that has picked up pace after workers at a Volkswagen plant “overwhelmingly” voted to join the United Auto Workers union last month.

After the VW vote, UAW president Shawn Fain said that “workers at Volkswagen have paved the path to victory for everybody else.” Automotive News reported that workers at the Mercedes factory have accused it of unfair labor practices and “aggressive and illegal union-busting.”

We’ll know soon whether the arrival of a new CEO will alleviate labor-management tensions or have no impact on the ongoing labor-organizing effort. According to the report, a vote will take place in about two weeks and UAW is confident that the Mercedes plant will be unionized.  

100%: How Will Tesla’s Layoffs Affect The EV Industry?

It’s a broad question, I know, but an important one as the planet slowly moves away from polluting gas cars and towards zero-emissions EVs. Even if you’re not an early adopter, you’re likely to think about EVs in the future as emissions regulations require more EV sales.

As always, we love to read our readers’ perspectives, so hammer your thoughts in the comments below. If you know anyone impacted by the Tesla layoffs or have any information that you would like to share, get in touch.

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