Tesla Cuts 3,000 Jobs To Lower Costs, Make The $35K Model 3 Viable

Tesla Motors announced it will cut its workforce by 7 percent, which equals to over 3,000 jobs, in an email sent to all of its employees in its bid to limit spending and make way for the cheaper versions of the Model 3.

The announcement caused Tesla’s share price to fell by as much as 8.4 percent before the start of regular U.S. trading, according to Bloomberg.

“We unfortunately have no choice but to reduce full-time employee headcount by approximately 7% (we grew by 30% last year, which is more than we can support) and retain only the most critical temps and contractors”, the company’s email read.

This is the second time Tesla is laying off employees. Last June, it dismissed 9 percent of its workforce, although it started hiring people on an increased rate shortly after to help ramp-up production of the Model 3.

“Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months,” the company added. “Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard range (220 mile), standard interior Model 3 at $35k and still be a viable company. There isn’t any other way.”

The Palo Alto-based manufacturer also acknowledged the need to launch at least the mid-range Model 3 in all markets by May of this year in order to reach more customers.

“We’re up against massive, entrenched competitors. The net effect is that Tesla must work much harder than other manufacturers to survive while building affordable, sustainable products.”

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  • Mr. EP9

    Ouch.

  • danno

    If production efficiency is to be achieved it will require significant new capital, which Tesla does not have access to.
    I do not believe they can build a $35,000 Model 3 and make a good enough margin in order to stay solvent.
    They have a huge $920MM bond due Q1, 2019, and I doubt they can repay it. It is convertible to shares at $360 per share, which I doubt they can achieve.
    Classic doom loop unfortunately.

  • LJ

    All normal in a young company trying to find its way. It stinks for the employees being let go, but it’s a necessary evil.

  • Stephen G

    GM laidoff 15,000 US workers last year.

  • Loquacious Borborygmus

    Just think! If they laid off all their staff we could have a Tesla for free! 0.o

  • MarketAndChurch

    Everyone is making their operations leaner in preparation for the upcoming recession slated for the end of this year or the beginning of next year.

  • Richard Alexander

    Should be $40/ share

  • ➡️ProtectOurHeritage⬅️

    I laughed so hard when I read this. Where are all the Musk fans that were previously criticizing GM and JLR?

    • Mike anonymous

      It is interesting that we still don’t have the $35k model 3 we were originally shown in the beginning of 2016. 600 days or so from now and it will have been Half a decade waiting on a vehicle originally shown off 3 years ago.

      Also 3,000 is quite a lot of people. But the reason they do this is because Tesla does not ‘stay alive’ due to it’s sales, it is actually their investors (that are the only reason they are around today). They have to work more-so with the money they are given than the money they make. At this point they would actually be losing money for every vehicle they build.

      So it’s more so a move to keep the company alive, than it is to meet the goal of a $35k car/vehicle. I can really only imagine what it must feel like to be one of 3,000 people and be told that your going to have the change your life due to the mistakes of another company or person (this goes for not only Tesla btw).

    • Axiom Ethos

      Troll alert!

      • ➡️ProtectOurHeritage⬅️

        Someone with a different opinion is a troll? 😂

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