In early 2024 and beyond, Elon Musk — the architect behind Tesla, X (formerly Twitter), and SpaceX — encountered an escalating wave of employee-related crises: bungled severance for laid-off staff, explosive legal battles, and accusations of radical mismanagement. This investigation traces the domino effect of these events — a perfect storm that has rocked Musk’s corporate empire and his public standing.

Tesla’s Severance Fiasco: From Apology to Fallout

In April 2024, Tesla announced a dramatic workforce reduction, laying off over 10% of its global staff — estimated at least 14,000 employees out of a headcount of approximately 140,000 . Very soon after, Musk sent a brief but explosive internal email:

As we reorganize Tesla it has come to my attention that some severance packages are incorrectly low… My apologies for this mistake. It is being corrected immediately.”

Why this matters:

The misstep exposed glaring flaws in Tesla’s internal controls and operational oversight during a critical restructuring

Employee trust — already fragile amid the mass layoffs — took a further hit; public relations damage compounded the credibility crisis .

Twitter / X: $500M Lawsuit and Executive Severance Battles

After acquiring Twitter in 2022 for $44 billion, Musk oversaw massive layoffs — over 6,000 employees across functions like trust and safety, communications, and accessibility. Employees sued, citing a 2019 severance plan promising at least two months’ pay plus extra compensation based on tenure.

A court initially ruled against the plaintiffs, stating ERISA did not apply — a legal win for Musk. Yet, as of August 2025, Musk and X have reached a tentative settlement in principle, delaying a scheduled September 17 hearing to finalize terms — estimated at up to $500 million

Concurrent lawsuits continue: former senior executives, including ex‑CEO Parag Agrawal et al., are seeking over $128 million for unpaid severance, alleging Musk fabricated reasons for termination to dodge payments

Impactful consequences:

The settlement marks a dramatic reversal from earlier legal victories.

Musk’s handling of layoffs is now shaping how federal downsizing under the Trump administration’s Department of Government Efficiency (DOGE) is perceived — drawing direct parallels

SpaceX NLRB Complaint: Severance Terms Under Scrutiny

The National Labor Relations Board (NLRB) filed a complaint in March 2024 against SpaceX, accusing the company of imposing unlawful severance agreements containing confidentiality and non-disparagement clauses — barring employees from speaking out or joining class-action lawsuits

The NLRB is seeking an order to rescind these agreements and notify employees of their rights. A hearing is scheduled for October 29, 2025, with potential escalation to federal court

The Collapse Unfolds: Repeated Patterns; Egregious Missteps

Mass Layoffs Without Proper PlanningTesla’s sudden workforce cuts followed by mishandled severance shook internal moraleTwitter layoffs sparked multi-million-dollar legal repercussions.

Repetitive Legal and Operational FailuresMusk’s management style — marked by abrupt decisions and disregard for HR protocols — proved unsustainable.Legal costs and reputational fractures soared across all fronts.

Erosion of Trust and Corporate Identity
Employees and executives alike have publicly questioned Musk’s leadership. Leaks and insider movements show growing disenchantment.

Broader RepercussionsThe Twitter severance fallout has become a blueprint (or warning) for government downsizing efforts.SpaceX’s legal troubles intensify scrutiny across Musk’s empires.

A Personal Brand Shaken

Musk’s reactions — from apologizing for botched severance to aggressive legal maneuvers — illustrate a CEO repeatedly caught off-guard, scrambling to manage cascading crises. Collectively, these incidents suggest a collapse: not of Tesla, X, or SpaceX individually, but of Musk’s unchecked managerial invincibility.

Conclusion: A Crisis Written in Severance

Elon Musk’s empire-wide severance disputes are more than a series of mistakes—they spotlight systemic failure, both in corporate governance and human empathy.

From Tesla’s internal blunder to lawsuits at X and sweeping complaints at SpaceX, Musk’s leadership is under siege. Legal liabilities, employee mistrust, and public backlash converge to mark a pivotal moment — one where even a titan might falter under the weight of his own decisions.