Tesla to cut jobs as cars too expensive


Tesla Motors Inc Chief Executive Elon Musk pauses during a news conference in Tokyo September 8, 2014.Image copyright

Image caption

Elon Musk said Tesla had “no choice” but to cut its workforce

Electric carmaker Tesla has said it will cut its workforce by 7% after the “most challenging” year in its history.

In an email to employees, shared on the firm’s website, founder Elon Musk said that growth at the firm had been strong.

But he added the firm’s cars were still “too expensive for most people” and the road ahead was “very difficult”.

The firm employs more than 45,000 people currently, indicating it will lay off about 3,000.

Mr Musk said 2018 was Tesla’s “most successful” yet, in which it delivered almost as many cars as it had in all the previous years of its existence combined.

However, while it ramped up production of its mid-market Model 3 car, Mr Musk said its products were too expensive for most people and its profits too low.

Image copyright

Image caption

Tesla has stepped up production of its mid-market Model 3 car

“This quarter will hopefully allow us, with great difficulty, effort and some luck, to target a tiny profit,” he wrote.

“However, starting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles.

“Moreover, we need to continue making progress towards lower priced variants of Model 3.”

He said Tesla had “no choice” but to reduce full-time employee headcount and retain “only the most critical temps and contractors”.

He added the firm would need to make these cuts while “increasing the Model 3 production rate” and making many “manufacturing engineering improvements in the coming months”.

Image copyright

It’s been a tough few years for the electric carmaker and its high-profile founder.

The firm has repeatedly failed to meet its own production targets, leading many investors to bet against it.

Mr Musk was also caught up in a number of scandals, including being sued by the US Securities and Exchange Commission after tweeting that he planned to take Tesla private.

Some analysts have speculated that Tesla will turn the ship around this year, but earlier this month it fell short on quarterly deliveries of the Model 3.

It also had to cut prices in the US to offset lower green tax credits.

In his email, Mr Musk noted the firm was cutting the jobs after expanding its headcount by almost a third in 2018.

“Tesla has only been producing cars for about a decade and we’re up against massive, entrenched competitors,” he said.

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

Leave a Reply

Your email address will not be published.