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 office in San Mateo, California, eliminating an estimated 200 jobs there, CNBC has confirmed, as part of a wider cost-cutting effort at the electric vehicle company.

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

Two employees affected by the layoffs told CNBC on Tuesday they knew the end of Tesla’s lease contract was approaching. The workers asked not to be named as they were not authorized to speak on the matter.

Tesla, which has yet to deliver on its promise of robotic axi technology, has previously relocated some 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 office workers in San Mateo had trained the teams in Buffalo, the staffers said.

The typical data annotation job at Tesla involves identifying and describing objects in short clips captured by cameras and sensors on Tesla vehicles. Data labels sometimes need to identify overlapping objects, such as a wheel in front of a curb or a pedestrian obscuring the full view of a stop sign. They are judged by the number of clips they can accurately annotate in a short period of time.

Most drivers of driver assistance and automated driving systems outsource at least some of their data labeling work to companies such as Amazon’s Mechanical Turk, Cloudfactory, Hive AI, and Appen.

An employee told CNBC that many of the staff in San Mateo had expected to be moved to Palo Alto or another office, but that they would not lose their jobs.

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

“You knew our lease was expiring here in San Mateo,” the manager said. She told employees the company was doing its best to try to move the entire Autopilot team that was located in the San Mateo office to the new Palo Alto location.

“Unfortunately, we couldn’t,” she said. “So what that means is we’ve restructured and your positions were impacted.”

The workers at the meeting were told 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 badges on their desks immediately and were told that emails containing information about layoffs and benefits would arrive in their inboxes.

Termination benefits are expected to include compensation based on the number of years you have worked with the company and an additional two months of benefits, extending coverage through October 31.

As CNBC previously reported, Tesla is in the midst of a cutting around 10% of its salaried workforce. However, it plans to add more employees per hour over time.

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

“Both factories in Berlin and Austin are giant money kilns right now,” Musk said in theā€¦ interview recorded on May 30 with a company-sanctioned fan club called Tesla Owners Silicon Valley. “It should be like a giant roaring sound that’s the sound of money on fire.”

WATCH: Musk calls newest factories ‘gigantic money kilns’

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