Elon Musk talks at the Automotive World News Congress at the Renaissance Center in Detroit, Michigan.Elon Musk talks at the Automotive World News Congress at the Renaissance Center in Detroit, Michigan.

As part of a broader cost-cutting effort at the electric vehicle company, CNBC has confirmed that the office in San Mateo, California, will be closing.

Hundreds of employees were tasked with labeling videos from the company's cars in order to improve their driver assistance systems. It was reported that the office was closing and people were being laid off.

Two employees who were impacted by the layoffs told CNBC that they knew that the lease was going to end. The workers were not allowed to speak on the matter.

A number of its Autopilot data employees were relocated to Palo Alto, California, in order to be closer to the company's headquarters. The company has been training teams in Buffalo. The employees in San Mateo trained the teams in Buffalo.

Data Annotation atTesla involves identifying and describing objects in short clips that were captured by cameras and sensors on the company's vehicles A wheel in front of a curb is an object that data labelers need to identify. They are rated on the number of clips they can accurately caption.

Some of the data labeling work for driver assistance and automated driving systems can be done by companies like Amazon's Mechanical Turk.

Many of the staff in San Mateo expected to be relocated to Palo Alto or another office, but not to lose their jobs, according to one employee.

A manager told the data teams about the layoffs at a meeting on Tuesday.

The manager said that the lease was coming to an end. She told the workers that the company tried to get the entire team to the Palo Alto location.

She said unfortunately that they couldn't. What that means is that your positions have been restructured.

The employees were told at the meeting that June 28 would be their last day of work. They were told to immediately leave their laptops and badges at their desk, and that they would be receiving emails with information about their benefits.

The packages are expected to include compensation based on years of service and an additional two months of benefits.

CNBC reported thatTesla is in the process of cutting 10% of its staff. There will be more hourly workers over time.

In an interview published last week, Musk said that the company's new factories in Texas and Berlin were losing Billions of Dollars because of supply chain disruptions.

In an interview with a company-sanctioned fan club, Musk said that the Berlin and Austin factories were huge money furnaces. It should be the sound of money on fire.

Musk calls new factories "gigantic money furnaces".