Billionaire Elon Musk, chief executive of Tesla, said the company will cut 7% of its full-time workforce, to boost its production of Model 3 Sedan cars.
The plan to cut jobs is part of the company’s cost-cutting measures in the past, aimed at stimulating demand and developing profits.
“Tesla needs to make these cuts to increase the production rate of the Sedan Model 3, along with implementing many technical improvements in the near future”. Mr. Musk said in an email sent to the whole staff at Tesla.
“Efforts to create clean, affordable energy products on a large scale require absolute effort and continuous innovation, but the successes of our mission are essential to ensure a better future. Therefore, we have to do all we can to promote this mission”.
Also earlier this week, Tesla announced it had stopped producing the cheapest version of its Sedan Model S and Model S SUVs. Elon Musk said on Thursday (January 17) that the company will also cut its referral program, which includes bonus privileges, including 6 months of free charging,because it “costs too much for cars”.
Tesla CEO also acknowledged the company is facing “an extremely difficult challenge” in making electric vehicles and solar products, which are considered alternatives competitive with traditional vehicles and energy products that depend on fossil fuel sources.
“Starting in May next year, we need to market at east the mid-range segment of the Model 3 version, due to the need to reach many customers who can buy our vehicles”, Mr. Musk said, “Moreover, we want to continue the progress towards the lower segments of the Model 3 version.”
Currently, the cheapest version of the Model 3 model is priced at $44,000, and Tesla is aiming for a similar version but only for $35,000.
“In the fourth quarter (2018), unproven preliminary results show that we continue to make profits at GAAP level (short for”generally accepted by accounting principles”), but still less thanthe third quarter”, Elon Musk announced. “This quarter, as well as the third quarter, hope to move the higher-end segments of the Model 3 model (this time to Eurasian markets), will help us, experience many hardships, efforts, and a little luck, get some small profits”.
(short for”generally accepted by accounting principles”), but still less thanthe third quarter”, Elon Musk announced. “This quarter, as well as the third quarter, hope to move the higher-end segments of the Model 3 model (this time to Eurasian markets), will help us, experience many hardships, efforts, and a little luck, get some small profits”.
Tesla has been disappointing investors after announcing that it will complete the transportation of 90 and 700 models in the fourth quarter last year, longer than expected by investors. The sign may partially offset the company’s sales results this quarter, expected to be released early next month.
Tesla is now facing a lot of pressure from major competitors in the car industry, with companies like Ford, Nissan or General Motors, also encroaching on electric vehicles, with new vehicle models competing with Tesla itself.