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Tesla cuts 200 jobs and closes Autopilot office in San Mateo

Elon Musk speaks at the Automotive World News Congress at the Renaissance Center in Detroit, Michigan.

Rebecca Cook | Reuters

Tesla is closing its San Mateo, California office and cutting an estimated 200 jobs there, CNBC has confirmed, as part of a broader cost-cutting effort at the electric-vehicle company.

At the San Mateo facility, hundreds of employees were tasked with tagging videos of the company’s cars to improve their driver assistance systems, marketed as Autopilot. Bloomberg initially reported on the office closure and layoffs.

Two employees affected by the layoffs told CNBC on Tuesday that they are aware that Tesla’s lease is nearing its end. The workers asked not to be named as they were not authorized to comment on the matter.

Tesla, which has yet to deliver on its promise of robotaxi technology, previously moved a number of its Autopilot data workers to its Palo Alto, California location. The company has also hired and trained data annotation teams in Buffalo, New York. Some employees at the San Mateo office trained the Buffalo teams, the employees said.

The typical data annotation task at Tesla is to identify and describe objects in short clips captured by cameras and sensors on Tesla vehicles. Data labelers sometimes need to identify overlapping objects, e.g. For example, a wheel hitting a curb or a pedestrian blocking a full view of a stop sign. They are rated on how many clips they can accurately annotate in a short amount of time.

Most ADAS and automated driving system developers outsource at least some of their data labeling work to companies like Amazon’s Mechanical Turk, Cloudfactory, Hive AI, and Appen.

An employee told CNBC that a majority of San Mateo employees expected to be transferred to Palo Alto or another office, but not to lose their jobs.

CNBC also obtained an audio recording of Tuesday’s meeting in which an executive told Tesla Autopilot’s data teams about the layoffs.

“They knew our lease ended here in San Mateo,” the manager said. She told workers that the company was doing its best to try and move the entire Autopilot team, which was based at the San Mateo office, to the new Palo Alto location.

“Unfortunately, we couldn’t,” she said. “So that means we went through a reorganization and your positions were affected.”

Employees were told at the meeting that they would be paid in full for the next 60 days, but that June 28 would be their last day of work. They were asked to leave their laptops and ID cards at their desks immediately and were informed that emails would be in their inboxes with severance pay and benefit information.

Severance packages are expected to include compensation based on years of service with the company and two additional months of benefits, extending coverage through October 31.

As CNBC previously reported, Tesla is in the process of cutting about 10% of its employees. However, there are plans to add more hourly workers over time.

Tesla CEO Elon Musk said in an interview published last week that Tesla’s new factories in Texas and Berlin lost “billions of dollars,” in part due to supply chain disruptions that hampered the company’s ability to continue production in both increase works.

“Both the Berlin and Austin factories are huge money-making machines right now,” Musk said in the May 30 taped interview with a company-sanctioned fan club called Tesla Owners Silicon Valley. “It should be like a huge roaring sound, which is the sound of money on fire.”

CLOCK: Musk calls newest factories ‘gigantic money ovens’