May 15 (Reuters) - The day before Elon Musk fired

virtually all of Tesla's electric-vehicle charging division last

month, they had high hopes as charging chief Rebecca Tinucci

went to meet with Musk about the network's future, four former

charging-network staffers told Reuters.

After Tinucci had cut between 15% and 20% of staffers two

weeks earlier, part of much wider layoffs, they believed Musk

would affirm plans for a massive charging-network expansion.

The meeting could not have gone worse. Musk, the employees

said, was not pleased with Tinucci's presentation and wanted

more layoffs. When she balked, saying deeper cuts would

undermine charging-business fundamentals, he responded by firing

her and her entire 500-member team.

The departures have upended a network widely viewed as a

signature Tesla achievement and a key driver of its EV sales.

Tesla Superchargers account for more than 60% of U.S. high-speed

charging ports, federal statistics show, and the company has

been the biggest winner so far of $5 billion in federal funding

for new chargers.

This account, the most detailed to date on the Supercharger

firings and the fallout, is based on interviews with eight

former charging-division employees, one contractor and a Tesla

email sent to outside vendors. Only Musk and Tinucci were in the

meeting described to Reuters; the four sources with knowledge of

the meeting are relaying what they heard about it from

Supercharger department managers.

Tesla, Musk and Tinucci did not respond to requests for

comment from Reuters.

Despite the mass firings, Musk has since posted on social

media promising to continue expanding the network. But three

former charging-team employees told Reuters they have been

fielding calls from vendors, contractors and electric utilities,

some of which had spent millions of dollars on equipment and

infrastructure to help build out Tesla's network.

A letter sent earlier this month by a Tesla global-supply

manager to Supercharger contractors and suppliers instructed

them to "please hold on breaking ground on any newly awarded

construction projects" and halt materials purchases, according

to a copy reviewed by Reuters. "I understand that this period of

change may be challenging, and that patience is not easy when

expecting to be paid!"

Tesla's energy team, which sells solar and battery-storage

products for homes and businesses, was tasked with taking over

Superchargers and calling some partners to close out ongoing

charger-construction projects, said three of the former Tesla

employees.

One construction contractor said Tesla staffers contacting

his company since the layoffs "don't know a thing." The

contractor said he had expected Supercharger projects to provide

about 20% of his 2024 revenue but now plans to diversify to

avoid relying on Tesla.

Tinucci was one of few high-ranking female Tesla executives.

She recently started reporting directly to Musk, following the

departure of battery-and-energy chief Drew Baglino, according to

four former Supercharger-team staffers. They said Baglino had

historically overseen the charging department without much

involvement from Musk.

The charging-team layoffs mark the latest drama in a

tumultuous year for Tesla as Musk has shut down or delayed

several core efforts meant to drive the rapid EV sales growth

that investors have expected. Instead, Musk now says Tesla will

shift its main focus to self-driving cars, a fiercely

competitive and riskier business that could take years to

develop.

The company posted its first decline in auto sales since

2020 in the first quarter amid fierce competition from Chinese

electric-vehicle makers and sagging worldwide EV demand. Reuters

reported in April that Tesla had scrapped plans for a

long-awaited affordable car known as the Model 2. That has

thrown into doubt Tesla's plans for new factories in Mexico and

India, where Musk had been expected to travel last month to meet

Prime Minister Narendra Modi, before canceling at the last

minute. And a host of executives have departed amid deep

companywide layoffs.

SCALED-BACK CHARGING EXPANSION

The energy team that was assigned to take over

charging-network management has some similar design and

construction roles, two of the former Tesla employees said. But

charging projects are fundamentally different because they are

located in public places and require extensive negotiations with

utilities, local governments and landowners, they said.

The energy team was already struggling to keep pace with its

current workload, said two of the former charging-network

staffers. Yet when the layoffs came down on April 30, Musk

posted that the company "still plans to grow the Supercharger

network, just at a slower pace." On Friday, Musk posted that

"Tesla will spend well over $500M expanding our Supercharger

network to create thousands of NEW chargers this year."

Two former Supercharger staffers called the $500 million

expansion budget a significant reduction from what the team had

planned for 2024 - but nonetheless a challenge requiring

hundreds of employees. In an analysis provided to Reuters, San

Francisco research firm EVAdoption estimated a $500 million

investment this year would translate to Tesla building 77% fewer

charging ports per month in the United States compared with the

automaker's pace through April.

'HOLDING THE BAG'

Tesla unveiled its first Supercharger stations throughout

California in 2012, with Musk calling the network a "game

changer" for EVs that would enable long-distance travel and

convenience "equivalent to gasoline cars."

The EV-charging business requires substantial upfront

investment, and analysts have often viewed it as unprofitable.

But Tesla's network had been profitable before the layoffs,

according to four former Tesla employees familiar with the

division's financial performance.

That owed to Tesla's cost-control and extensive analysis to

choose locations that could draw business throughout the day

rather than only during peak-demand times, when electricity

costs spike. One former Supercharger staffer said Tesla's costs

per-charging-port were typically at least 50% lower than those

of competitors.

As recently as last month, Tesla said in a securities filing

that it needed to expand charging to "ensure adequate

availability" for customers, particularly after automakers

including Ford, General Motors ( GM ), Toyota ( TM ) and

Hyundai announced they would start making their cars

compatible with Tesla's charging plugs, giving their vehicles

Supercharger access.

Another former employee said that rollout is "completely

jeopardized" because there will not be enough new charging sites

coming online, and the company was only starting to implement

upgrades to allow more compatibility with other manufacturers'

vehicles.

Three of the former employees called the firings a major

setback to U.S. charging expansion because of the relationships

Tesla employees had built with suppliers and electric utilities.

Tesla had grown into one of the larger customers for many major

utilities around the country, and many had hired new staff and

planned new infrastructure based on Tesla's charging-network

expansion plans, the former employees said.

Other companies may be able to fill the gap, the former

employees said, but the goodwill built over time with utilities

and other contractors from Tesla's large-scale charging

investments will be difficult to replicate.

"It's just unfortunate that now they're stuck holding the

bag on all these different projects," one of the former

employees said. "It's really sad to see all these relationships

burned and people be really angry - rightfully so."