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Tesla To Cut Workforce By Seven Percent

Tesla To Cut Workforce By Seven Percent

Just on the heels of announcing some major SpaceX layoffs, Tesla CEO Elon Musk is now revealing that he will be cutting 7% of the electric vehicles maker workforce. In the email, Musk states "we unfortunately have no choice but to reduce full-time employee headcount", adding that "there isn't any other way" to achieve Tesla's goals.

The company says it delivered over 245,000 electric cars and SUVs last year, almost as many as all previous years combined.

Musk needs to find a way to mass produce and deliver the lower-priced Model 3s he has staked the company's future on - an affordable mid-range electric vehicle priced at $35,000. That will give Tesla another temporary profit boost in Q1 2019 as it sells high-priced Model 3s to affluent customers in Europe and Asia. Musk says this makes the need for lower-priced Model 3s "even greater". In fact, he says that Tesla's 2018 growth was "more than we can support;" the company grew by 30% in the past year. Using our data, we're able to cross-reference Musk's data with external data to see what's what.

Tesla shares dipped dramatically on Friday, down 13 percent to $302.

This year, there was already a cut in Tesla jobs when 9% of staff was reduced in June.

Tesla's overarching challenge is making cars, batteries and solar products cost-competitive with fossil fuels, Musk said Friday in the blog post.

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In a statement to CNBC, Wedbush analyst Dan Ives notes that Tesla's worldwide Model 3 push would likely determine the company's success in the first half of 2019. At the same time, Tesla will look to increase Model 3 production rates to meet its goals for the year ahead.

Tesla posted a $311 million quarterly profit in October, only its third profitable quarter in eight years as a public company.

"The net effect is that Tesla must work much harder than other manufacturers to survive while building affordable, sustainable products".

Currently, the most affordable Model 3 you can buy costs $44,000-significantly above the target price of $35,000 Musk announced in 2016. In the fourth quarter, Tesla built about 4,700 Model 3s per week-and that's of course including a new line assembled previous year in a tent in the factory parking lot.

Sorry for all these numbers, but I want to make sure that you know all the facts and figures and understand that the road ahead is very hard.

The automaker has faced pressure from big rivals in the industry, with companies like Ford F, Nissan 7201.T-JP and General Motors GM committing to investments in the EV space and launching new vehicles in a challenge to Tesla.


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