Why Tesla's Top Auto Engineers Are Quitting Tesla’s Core Money-Makers

Forbes

Forbes Senior Editor Alan Ohnsman joins Forbes Talks to discuss the "engineering exodus" at Tesla following Elon Musk's approved pay package. He details the departures of key engineers overseeing core, profitable EV programs and the risk of neglecting core revenue streams for speculative ventures like AI and robots.  Read the full story on Forbes: https://www.forbes.com/sites/alanohnsman/2025/11/10/teslas-engineering-exodus-comes-amid-shift-from-core-ev-mission/  00:00 Introduction 00:49 Tesla’s Engineering Exodus 03:12 Product Stagnation and Poor Financial Performance 08:26 The "Irreplaceable" CEO Narrative 11:51 Decline in Global EV Sales and Competition 15:41 The Risk of Musk's Singular Vision  19:25 Betting on Cybercab and Optimus 24:55 Profitability Questions and Capacity Shifts for Robotics  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes.

00:07Joining me now is my colleague Alan Onsman, Forbes senior editor and author of The Current

00:12Climate Newsletter. Alan, thanks so much for joining me. Hi, Brittany. Great to be with you

00:17again. It is great to be speaking with you because we talked about this last week, but Elon Musk,

00:22he had his trillion dollar pay package approved by Tesla shareholders. But you're reporting just

00:28days later, two engineers who have both been with the company for eight years and worked on the EV

00:33side of the company. They both quit just a few days later. And this comes after a string of other

00:40high profile employees were either fired or left Tesla as well. You're describing this as an

00:46engineering exodus. Why are we seeing this? That's a great question. As you mentioned, on Sunday,

00:52two high level engineers at Tesla, Emmanuel Lamakia and Sadant Awasti, both announced on LinkedIn that

01:03they were leaving the company. They said, you know, it's been a great experience. They thanked

01:08management and said, you know, we'll keep you posted on what comes next. But in each case,

01:14Emmanuel Lamakia ran the Model Y program globally. And that is Tesla's single biggest moneymaker.

01:21That vehicle is, you know, one of the best selling, if not the best selling cars in the world and is

01:28the cornerstone of Tesla's revenue. And Sadant Awasti was in charge of the Model 3 and the Cybertruck

01:37program. So, you know, between those three products, it's about 90 plus percent of Tesla's

01:45sales volume. So that's not inconsequential. And as you mentioned, their departures,

01:52the timing was fascinating because, of course, we had the Tesla shareholder meeting on November 6th.

01:58And then just, you know, within three days of that, two high placed engineers announced they were

02:04departing. And there has been just a string of folks who have left the company this year,

02:11the former head of the Optimus robot program, the former head of battery tech, a very high placed,

02:18some called him like quietly sort of Tesla's number two early this year, who was in charge of

02:25sales and manufacturing for Europe and North America, departed. The U.S. vice president of

02:32sales and service left. And all of those are within the last five to six months.

02:35And while Tesla employs a lot of people, Tesla has a very light C-suite and not a lot of high

02:44level, known high level executives aside from Elon and the CFO. So when you get departures like this,

02:52it's pretty meaningful because these are big programs. So if you've got somebody who was running

02:57the Model Y program, the Model 3 program, the Cybertruck program, the Optimus program,

03:03and the battery tech, you know, those are all pretty core to Tesla's business. So it's certainly

03:11notable. And I know that you said the two engineers who left over the weekend together, they ran 90%

03:18of the sales volume at Tesla. I'm curious because you and I have had a lot of conversations of Tesla

03:24not really doing well this year. Q1 and Q2 weren't great for Tesla. Q3 was what you described as a sugar

03:30high. Cyber trucks flopped. How much of that do you think is that the fall of these engineers or

03:37the other high level engineers and not just Elon Musk? Well, you know, undoubtedly, perhaps they

03:45were getting some grief internally from Elon Musk because he's not a patient person. And if things

03:50aren't going well, you know, he he will make life pretty, pretty difficult for people. So I have no doubt

03:57that both of those engineers who left were probably dealing with with a lot of tough feedback from

04:03Elon. But if we look at at the products themselves, Cybertruck, the only person responsible for

04:09Cybertruck at the end of the day is Elon Musk. It's his design. He wanted it. It's exactly what he

04:15wanted. And so, you know, one of the engineers is tasked with having to make the most of a product that

04:21Elon really prioritized. And that has turned out to be one of the single biggest failures in the

04:28modern era in the auto industry. He predicted hundreds of thousands of sales. It did about 50,000 in its

04:34first year. And it's tracking to do about half that this year. So it's it's not a success. Multiple recalls.

04:41It's the butt of jokes by late night talk show hosts and comedians. So it's, you know, it's not been a great

04:46outing. In the case of the Model 3 and the Model Y, the volume there is still high, although declining.

04:54And one of the reasons it's declining is Tesla hasn't done what normal auto companies do. Take

05:02Toyota or Honda. Every four to five years, they'll do a full model refresh of the product and add lots

05:09of new features and tweak the design. And it may end up looking a lot more compelling. Tesla is

05:16really not interested in doing that. It essentially has established these products. And then it just

05:22lets them run with not a lot of major changes over the course of their life. Just this year,

05:28both Model Y and Model 3 have been lightly refreshed. They have a new looking front end and a slightly

05:33different front headline design. But that's about it. There's not it's not a major like, you know,

05:39they didn't they didn't redo it from from from scratch. And the reason for that is it's really

05:45profitable not to change your product. If you've done the capex and the investment to do a new model

05:51and then you just let it run. That's great. Because, you know, you've you've amortized your

05:58investment in it and you're making back your investment. So the margins get more attractive

06:02the longer you let it go. The problem is consumers get bored. You know, Model 3 came out in 2017.

06:10Model Y came out at the end of 2019, beginning of 2020. The 3 is long in the tooth. We're eight

06:19years into it and it hasn't dramatically changed. Model Y is five years old. And again, it's just

06:26received its first kind of major refresh, which was the front grille. But it's it's pretty superficial.

06:33So the the engineers who left, they would oversee production of of these modified vehicles. And the

06:40you know, Elon's goal is to maximize the profit profit margin for for the existing product. So what

06:47we're seeing is in each case, they the company did not invest substantial amounts to redo these

06:54products. They did sort of light superficial things on the surface. And this is where, you know,

07:00Tesla's getting hit because there's just a lack of a fresh product at the company. And that's

07:05separate from anything else with the reputation and how people view Elon. You know, the auto business

07:11at the end of the day, it's all about new product and and and car companies for a century have focused

07:16on that. Elon doesn't come from that background. And his view seems to be I've designed it. It's it's

07:22fine as is. We'll do some light refreshes, but no major redos. And in fact, the newest iterations of the

07:29Model 3 and Model Y are simply cheaper versions. So they've downgraded some of the materials and other

07:35things to sell them for a little bit less to try to help the appeal. Not a lot of industry analysts

07:41think that's a winning strategy that, you know, an existing model that you just make a little less

07:47attractive by taking things away doesn't necessarily excite people to buy it. Probably if

07:54someone wants a cheaper Tesla rather than getting the lower grade version or the discounted version

08:00of a Model Y, you would get a lightly used version that would probably be about the same price. So

08:06in terms of strategy, it's objectively there may have been some frustration with the engineers with

08:14this this approach because auto engineers want to do new stuff and they always want to do new stuff.

08:19That's exciting. Overseeing something that's not changing is is not that interesting.

08:25Something that I remembered when I was reading this piece on the staffing exodus at Tesla

08:30is a letter that some board members wrote shareholders when trying to convince them

08:35to approve Elon's pay package. And they essentially said Elon Musk is the only guy for the job. He is the

08:41only person that is capable of leading Tesla right now. It's very clear that Tesla's board,

08:47the shareholders based on approving that trillion dollar historic pay package. They think Elon Musk

08:54is completely irreplaceable. But when you see all of these other not obviously as high as Elon Musk,

09:00but high level employees leaving, are they irreplaceable as to can someone replace them?

09:05What does that really look like? Well, I think part of the issue and this is something we've talked

09:11about is core to the board saying Elon is so essential and vital to our future is he's laying

09:19out an entirely new business strategy for the company. Tesla made its bones on batteries and EVs

09:25and charging services, and that's its revenue source. But he wants to move beyond that. He doesn't want

09:32people to think of Tesla as a carmaker. He wants people to think of it as an AI and tech company.

09:36And so as he laid out last week, he keeps talking about this future, an AI powered future of humanoid

09:44robots and robotaxis. That's different and that's a different skill set than being an auto engineer

09:51that's doing an electric car like the Model Y, for example. You need a different type of engineer to

10:00work on on Optimus robots than you do on a car. And so it may be that they're, you know, it may be

10:08somewhat frustrating for some of the very talented people that are that are working at the company

10:13who've been working on the EV business, that their efforts are not being prioritized in a way that

10:20they once were. So I think that might be more of the issue. And undoubtedly, you know, are the two

10:25engineers who left replaceable? Sure. Undoubtedly, because there have already been some big departures

10:32in those areas previously, even higher level engineers who've been with the company for a long

10:38time. Drew Baglino and people like that who left a year ago. So what you are seeing, though, is this

10:45kind of whittling down of the talent pool. You know, for years, I would talk to different analysts who

10:54looked at the fact that Tesla and SpaceX had their pick of the cream of the crop of kids coming out

11:00of engineering schools. Everybody who wanted to do something exciting in engineering wanted to work

11:05for Tesla or SpaceX. You know, EVs and batteries and rockets were pretty exciting. That's not really

11:13the case anymore. Tesla doesn't have quite that same appeal, the recruiting edge that it once did.

11:20And, you know, you had people joining Tesla for years who are coming from traditional

11:24auto companies who wanted to do something very different. I would argue that period is probably

11:32over. Undoubtedly, Tesla can still recruit from General Motors or Ford or Honda, but that's not

11:38really going to be the bulk anymore of who's coming in. And I think in this pivot, the focus is a bit

11:44away from from the auto talent and more to roboticists and AI scientists and things like

11:50that. And to your point, these auto engineers oversaw the moneymaking aspect of Tesla, at least

11:56a lot of it, as you said, 90 percent of the sales volume. And if Elon Musk is not even prioritizing

12:02these core businesses that you and I talk about, the ones that make the money, I mean, does this

12:07exodus impact the bottom line? What do you think?

12:09I think it can. And I think we'll we'll see something along those lines, because as we've

12:14talked about before, as you mentioned, third quarter sales really spiked dramatically as

12:20people rushed to get federal tax credits in the United States. But but the fourth quarter

12:24is going to be down and Tesla is going to have a significant year over year decline in its

12:30EV sales this year, which will feed through into lower revenue and lower profit. And the first

12:37quarter of 2026, the story doesn't change. The company is trying to manage with declines in

12:46major markets. Tesla's down in China. It's down significantly in China. And that's the most

12:51problematic because that's its most profitable market. It's down in China mainly because it's

12:56not adding enough fresh new stuff. Chinese EV makers, there's just a broad array of exciting

13:03new products that are flooding the market that are attractively priced with all kinds

13:07of great new features. Tesla's not keeping up competitively in China. So Tesla's issues

13:12in China have already exposed this basic problem that it's not investing enough and is not aggressive

13:19enough in its car sales. So that's not a good sign for the future. In Europe, the issue is a little

13:24different. People just don't like Elon because of his outspoken support of right wing politicians.

13:29And he's much more controversial in Europe. And people have stopped buying the brand. So Europe

13:35is in decline. And in the United States, it's a mix of both. I think you have buyers in the United

13:40States that are put off by Elon personally. But also, there's just a lot of interesting new product,

13:46EV product coming into the US market. And even with lower volume as a result of the elimination of

13:53federal tax credits, you're still going to have interesting new products. I mean, the Chevy Equinox EV

13:58that came out at the end of last year, and GM's been selling this year, is a great competitor to

14:04Model Y. And it's more affordable and maybe more attractive to some eyes. Hyundai has a very broad

14:09line of interesting EVs. General Motors is also coming back with its Chevy Bolt as a more affordable

14:15entry-level EV. There are additional products that keep hitting the market. Rivian early next year

14:22is coming out with its R2, which will be a $45,000 competitor to Model Y. So there's a lot of new

14:29competition in the US market as well. Is Tesla going to be able to answer that right now?

14:35Its only answer to that is we're going to sell you a cheaper version of Model Y with fewer features and

14:41not as nice materials, I guess. So I'm not sure that's a compelling way to go. So they are going to

14:48continue to see, they're going to struggle. Sales are not going to be improving anytime in the

14:54foreseeable near term. And so that is a real issue. So the departure of these engineers in this case,

15:03I think that's a sign of they understand what's coming, which is Tesla's going to keep doing what

15:08it's doing right now with few changes, with little fresh product, and the market's going to hammer them.

15:14And maybe, you know, I don't know the inside of what was going on, but perhaps they were getting yelled

15:18at a lot. And they didn't like that. So we'll see where the two of them end up. It almost seemed

15:25that like, I don't know if their departures were coordinated, but it was curious that within three

15:30hours of, you know, they both announced they were leaving at approximately the same time. And clearly

15:35they've worked together closely. So we'll see where they, if they pop up at a competitor, for example.

15:40And your piece really hinted at the future of Tesla. And I want to read part of it, because you wrote

15:47that the most recent departures, quote, underscore a continuing problem that Tesla's board appears

15:52uninterested in solving the lack of a strong executive team and a clear succession plan for the post

15:58Musk era. And he has some goals that he has to hit some lofty goals here in order to get that trillion

16:03dollar pay package within the next decade. But can you imagine or is there a world where Elon Musk

16:09leaves Tesla anytime soon? Because I can't really imagine a Tesla without Elon Musk. And you've said

16:15this in this conversation, as well as conversations in the past, there's Elon Musk, a very thin C-suite

16:21that apparently is getting much thinner. And then most of the employees are rank and file.

16:26So is there anyone that could ever replace Elon Musk, do you think?

16:31Within the company, honestly, there's no one who comes to mind in-house. Tesla once

16:39had a pretty broad set of executives who did a lot of things. The, you know, the cupboard

16:47is bare. There's been so much turnover, so many departures. I can't tell you right now who has

16:54real authority and who would be a clear number two. It's, you know, and that point about the board,

17:03I mean, this is reality. Like there, there is no succession plan. If something were to happen to

17:09Elon, if he gets hit by a bus tomorrow, Tesla's in trouble. There is no one waiting in the wings

17:17to take over. And I think that's, Elon wants it that way. I don't think he sees the company with

17:22a future without him. To your point, would he leave the company? I can't see him doing that or doing

17:28anything that would harm, uh, his, his wealth because all of his wealth is tied to Tesla at

17:35this point. So it's mutually assured destruction. If he leaves, it's bad for the company. If the

17:40company gets rid of him, it's bad for the company. So they're just kind of locked into the situation,

17:45but it is really, it's quite something where there, there is no clear successor. There's no president,

17:51there's no COO, uh, right now. I think I'm not even sure there's an executive vice president at

17:59the moment. I don't know if anyone holds the title higher than senior vice president. Um,

18:04and, and, and that's unusual. I think you can look at any public company, any large public company,

18:09and there's a pretty big C-suite. There are a lot of executives there, and that is simply not the case

18:16at Tesla. And many in the past who looked like they could be successors have left and are doing

18:23different things and are at General Motors and, and, uh, uh, at Ford and, and many other places where,

18:31um, you know, they've, they've just decided to move on. So that seems pretty risky, uh, because

18:38people don't last forever and things happen. So you always want to have a backup plan. And I don't

18:44have a clue what the board's backup plan is. And do you think that this indicates at all that Elon

18:50Musk is going to have a shift in strategy when it comes to the future of Tesla? Because after he was

18:56awarded that trillion dollar pay package, after the shareholders voted for it, he was laying out the

19:01future of Tesla. And it seemed like he was bored of electric vehicles. It seemed like he was really

19:07into AI and robotics. And that's what was exciting him. As you and I have talked about time and time

19:12again, those aren't the moneymakers. They haven't made Tesla any money. It's the EVs that are, it's

19:17the batteries that are, it's the charging stations that are. Do you think that this exodus shakes

19:22anything up when it comes to Elon's vision? Uh, no, no, I think it, I think it's aligned with,

19:29with where he is right now that he's just not prioritizing the auto business. He did talk about

19:34two products that are supposed to come out next year. The Tesla semi, which is many years delayed,

19:41is apparently finally going to come to market. Uh, it's an electric semi truck with 500 miles of EV

19:47range. Um, but at best that only adds several thousand units of additional sales to the company.

19:55Um, uh, commercial trucks, full size class eight commercial semis. That's not a big market. I think

20:01it's fewer than a hundred thousand trucks that sell annually versus 16 or 17 million passenger

20:07vehicles. So it's, it's a much smaller market. And if Tesla sells 10 or 20,000 semis, that's huge

20:14within the trucking industry, but that's not, you know, an incredible amount of additional revenue.

20:20Uh, so even if it comes out, I think it's questionable how big a component that's going to be for,

20:26for the business. Um, the other, uh, product that's a curiosity is the cyber cab, which he promises

20:32goes into production in April. Um, the challenge with that is it's a two door product, a two door

20:39electric car that apparently was what was being called for a long time. The model to the Tesla

20:44model to, uh, that Elon said last year, the company wasn't going to do, he said, we're never going to

20:50sell anything. That's not fully autonomous from this time forward. So he claims as of April that,

20:56um, that product will go into production and would be on sale shortly thereafter, uh, with no

21:02steering wheel, no pedals, no side mirrors, and with full autonomous capability. There are two

21:09challenges to that. Number one, as we've talked about in the past, Tesla is not the leader in

21:14autonomous vehicles and does not yet have a fully autonomous vehicle, despite the name full self

21:19driving, uh, Waymo does, but Waymo is not selling you a, a, uh, an autonomous vehicle. They will let you

21:25ride in them in their Robo cab service. Um, so number one, setting aside the technical challenges

21:32that Tesla has not yet, uh, proven that it's mastered, that it can, you know, produce a safe

21:37fully autonomous vehicle is the fact that by law, no automaker can sell a car to consumers that has

21:45no steering wheel, no pedals and no side mirrors. And that's because of NHTSA regulations, federal

21:50regulations dictate certain things must be on the vehicle. Um, you, if you want to do something like

21:58that, uh, sell a product like that, that doesn't have those features, the mirrors, the pedals, the

22:03wheel, you need a waiver from, uh, from, uh, the National Highway Traffic Safety Administration. Uh,

22:10Zoox, for example, Zoox is a robo taxi company that wants to compete with Waymo. Zoox has a custom

22:16built robo taxi. It has no, uh, steering wheel. It has no controls at all. It doesn't look like a regular

22:22car. Uh, whereas Waymo is using modified electric vehicles for its fleet. Zoox is going through

22:30a regulatory approval process, and it's been very long. It has received a waiver to operate

22:35its vehicle on public roads, and it's still getting to the point where it gets final approval, uh, to

22:41deploy these, uh, unusual, unique vehicles in a public commercial robo taxi fleet. So it's been

22:48working through this process for the last couple of years. I don't know where Tesla is in that process

22:55of negotiating with NHTSA and seeking the approval. Um, there's been nothing from the company, uh,

23:01talking about this, uh, about where that stands, but separate from the ability of Tesla to offer a

23:08fully autonomous driving system is the fact that as of today, uh, legally, they cannot sell a car like

23:15the one that he described. And so when you think about this strategically, you know, is he announcing

23:22something that he doesn't yet have legal clearance to sell and produce? Maybe. Um, so this may be

23:28another, you know, curious issue. Uh, Elon over the years has set many goals and targets that the

23:35company has failed to hit at the moment. Cyber cab going into production in April and coming out as the

23:42product he talked about last week. I don't know how that happens. Um, but, but I could be wrong

23:49behind the scenes. Maybe there have been deep negotiations with NHTSA. Maybe this is very far

23:54along. Um, we shall see, but at the same time, NHTSA is currently investigating Tesla FSD because of its

24:02poor safety record. So it's, it's hard to know how, what to, what to make of this. And then of course,

24:08his other big issue is, is optimists, uh, the robots. And, and to your point, that's really where

24:14he got passionate last week when he was talking about optimist robots. Um, and you know, he, he

24:19believes there is going to be a limitless market that everyone wants essentially a robot slave.

24:26Uh, that's what it is. It's like, I don't know what else you call it. Um, he thinks they'll be

24:31providing healthcare. He thinks they'll be working with law enforcement. I mean, just any number of things

24:37and all of that is sounds exciting, but as of today, uh, they don't have a working functional

24:44humanoid robot that they can sell that, that would do anything. And he claims,

24:48maybe it'll only cost $20,000. We shall see, but it all seems really speculative at the moment.

24:54And to that point, is there any indication that these crime fighting healthcare assisting robots

25:01are going to be able to be profitable, to turn a profit for Tesla, to be mass produced anytime soon?

25:07I have no idea. I couldn't begin to tell you that that that's a whole different set of metrics.

25:12What he did mention was they're going to be doing the first, uh, production line for optimist at the

25:17Fremont, California plant, which, uh, you know, has historically been their, their, their, their main

25:22plant. Um, I think the acknowledgement that, that, that Fremont, some of its capacity is going to be

25:28converted to making humanoid robots is a reflection of the fact that Tesla's EV sales are not going to be

25:35what the company had anticipated. I think, um, officially Tesla has about 2 million units of

25:39production capacity, uh, at its various plants, uh, in the U S Germany, and China. Uh, but it's

25:46tracking to only sell about 1.5 to 1.6 million EV. So it has a surplus of factory capacity at the

25:54moment. Two years ago, they were getting ready to add a plant in Mexico. They were on again,

25:58off again, talks about India. None of that's happening right now. Um, so it seems already

26:03a signal that the auto business is, is, uh, no longer, uh, the rising tide for, for Tesla and

26:10that he's already making plans for what comes next. I really have no clue on the, you know,

26:17the, the, the potential profitability of a humanoid robot. I, that's far, far beyond anything I know.

26:24I don't, I don't know anybody who knows that. I mean, Boston Dynamics has been doing humanoid robots

26:28and dog robots and animal shaped robots for a very, very long time that are way more impressive

26:34in terms of their, um, their capabilities than anything we've seen from Tesla so far. And

26:40I'm pretty sure Boston Dynamics is not making any money off of those things right now.

26:44Well, there's certainly a lot to look out for per usual. I appreciate the reporting. Alan,

26:49thanks for joining me. Thanks, Brittany. Always good to be with you.

26:54Thanks, Brittany.

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