Tesla is pulling back from EV charging, and people are freaking out

The layoffs halted construction work at a dozen Supercharger sites in Texas. In New York, property owners in negotiations with Tesla were told the company was withdrawing from discussions about adding chargers to their sites.

The upheaval comes as the EV industry struggles with sluggish sales growth and a bumpy rollout of a national highway-charging network.

The Tesla layoffs were sweeping and included employees in the sales force to those overseeing the construction of charging sites, according to people familiar with the decision. Contractors and executives at other automakers that have partnered with Tesla on charging described widespread confusion over the future of Tesla’s charging business.

Some of those laid off woke up Tuesday morning to find themselves locked out of the company computer system and learned about the layoffs in messages to their personal email accounts.

“Dear Employee," the message began. “As you know, we recently announced a significant decision that impacts the entire organization, and you directly."

The Information earlier reported that Chief Executive Elon Musk, in an internal email sent late Monday, said he would dismiss everyone in the Supercharger group, and its senior director Rebecca Tinucci was leaving the company.

The world’s most-valuable automaker last week said its first-quarter profit plunged to its lowest level since 2021. Tesla plans to slash more than 10% of its global workforce amid broader cooling in consumer demand for electric vehicles.

Tesla has long been the bright spot in a messy charging world, outbuilding and outperforming other companies to create the closest thing the U.S. has to a national highway network, considered the linchpin to greater EV adoption. A Tesla pullback in EV charging could slow the entire U.S. market.

Tesla has been opening up its network to other kinds of cars and chasing—and winning—public funding for chargers, a boon to the Biden administration’s plans to build out national charging infrastructure. States have started to release the first wave of around $5 billion for a highway network, approved in the 2021 federal infrastructure law.

The layoffs caught some employees by surprise. One person who was laid off said that while it was understood the company was in a precarious position, the charging business had been viewed as a priority among employees.

Tesla shares fell nearly 2% in Wednesday morning trading after declining 5.6% Tuesday.

The departures also baffled the charging industry.

After Tesla opened its charging to other cars, major automakers spent last summer announcing a switch to the Tesla-designed charging connector and signing agreements to allow their customers access to the Tesla Supercharger network.

“This is by all accounts a dramatic move," said Nick Nigro, founder of Atlas Public Policy. Tesla should “take things more carefully in the future because increasing amounts of people are dependent on them. In the case of infrastructure projects, there’s lots of sites that are under development, including those that federal awards are attached to."

On Tuesday, Musk posted on X, “Tesla still plans to grow the Supercharger network, just at a slower pace for new locations and more focus on 100% uptime and expansion of existing locations."

The charging pullback is the last blow to waning growth in EV sales.

At the start of last year, automakers were having a hard time keeping up with demand for EVs, but the well of willing consumers proved more shallow than expected. An early wave of adopters made their purchases and by last summer, dealers began warning of unsold electric vehicles clogging their lots. Within months automakers were scaling down their plans for EVs and adding hybrids to their lineups as those rose in popularity.

At least some of the reason for EV hesitancy is the nation’s fledgling charging network. The ability to repower cars in about 30 minutes and let drivers hopscotch from charger to charger across the country is considered essential to putting EV drivers at ease.

Tesla is known for building charging stations cheaper and faster than competitors. Its installations are up around 19% this year through March, to 1,526 charging ports, according to the firm EVAdoption. That is more than four times as many pieces of equipment as the nearest charging provider.

Andres Pinter, co-CEO of Bullet EV Charging Solutions, a subcontractor building a dozen Supercharger sites in Texas for Tesla, said all 20 of its contacts at Tesla had been laid off. Pinter has received a series of bounceback emails—“This email address is no longer valid. Any future emails sent to this address will not be received"—but no other communication from the company. He halted construction work at the sites for now.

A Tesla slowdown could also leave a gap in the market for others to fill. Other companies building charging networks might look to capitalize on the pullback, said Carleen Cullen, co-founder and executive director of Cool the Earth, which advocates for EV adoption and improvements in charging reliability.

“With upgrades making stations more reliable, Tesla’s slow-walk approach may cause short-term market upheaval, but it will result in a healthier competitive landscape," Cullen said.

Write to Jennifer Hiller at jennifer.hiller@wsj.com, Sean McLain at sean.mclain@wsj.com and Ryan Felton at ryan.felton@wsj.com