Skip to comments.Tesla Just Dealt a Devastating Blow – Elon Musk Trims 7% of Workforce to Cut Costs
Posted on 01/19/2019 8:28:47 PM PST by NorseViking
Tesla delivered a catastrophic blow to its U.S. workforce this Friday. In a memo reviewed by the Wall Street Journal, CEO Elon Musk said the company will be slashing its staff by 7%.
Despite announcing its first gigafactory outside of the United States in Shanghai barely over a week ago, the electronic car maker will be handing over 3,000 of its 45,000-strong workforce their leaving papers.
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Tesla stock is down $45
Is 7% really catastrophic?
I would stand in a long line in order to NOT buy a Tesla.
Its pretty bad.
TSLA stock tends to make big swings in both directions.
Tesla sells unicorns for smug liberals to ride through their delusional rainbow fantasyland. An electric car is a product that serves no real-world need, other than the desire to virtue-signal.
The goal is to get the price of the base Model 3 down to 35K as promised, and to compensate for the loss of customer rebates. Tesla’s competitors will eventually have to do the same. The good news is Tesla is going to continue to reduce its costs and be more efficient.
I think the reason for the stock drop is that their profit won’t be as good as last quarter and how that could affect their bond payments.
I’d rather drive a Falcon than a Tesla!
The Bay Area is still crazy about Tesla, I probably see a hundred every day. But then they also vote Pelousy in every two years.
Some excerpts from Musk’s internal memo:
“Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months,”
“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.”
Musk also noted that, while fourth quarter deliveries were “almost as many cars as we did in all of 2017”, the group still needed to reduce prices in order to make products that were “cost-competitive with fossil fuels.”
“Right now, our most affordable offering is the mid-range (264 mile) Model 3 with premium sound and interior at $44k,”
“The need for a lower priced variants of Model 3 becomes even greater on July 1, when the US tax credit again drops in half, making our car $1,875 more expensive, and again at the end of the year when it goes away entirely.”
3,000 jobs? Nothing good about it but calling it "a catastrophic blow to its U.S. workforce" sounds like major hyperbole to me.
Bottom line: People prefer cars with reliable internal combustion engines. They voluntarily do not buy electric vehicles. The liberals will try to outlaw internal combustion engines, tax and restrict ownership and promote electric vehicles. Big fight over the next 25 years. Tax credits were the initial sweetner, harsh coercion comes next. Tesla’s future depends on government coercion of consumers.
7% is nothing
Funny how tough it is to run a company without Washington shoveling wads of cash your way.
At least this is just Musk’s car company.
I’d hate to get half way to Mars and get news like this.
His cars are still to expensive. The cost sharing with Americans that didn’t want the car it the first place is just going away.
Tesla will have to compete directly with Chinese e-car manufacturers. Even with a tariff and Tesla having a plant there; it will be next to impossible to compete with the Chinese. I’m not sure if Tesla will be making cars for sale there or here or both.
They’ve been doing it a while now too. The only real question will be about quality and design. If they are on par with Tesla or better; Tesla may not make it. Then there’s the recharging infrastructure. That’s a huge deal. Motels with recharging stations and just gas stations with recharging stations.
The current goal, if I’m not mistaken, is for e-cars to have a 7% market share in the USA by 2030. If they do well and battery technology catches up with the need for 600 mile charges and a quick 10 minute recharge; they may start making gains on the market share but only if they are reliable and affordable. Heck; regular gas powered cars are $30k new these days and that’s not for anything exotic. A new Mustang GT is $40+k starting price.
I wouldn’t be doing any investing in that market at this time but maybe someone else knows something I don’t. That next gen battery tech may come out tomorrow.
Tesla seeks significant automation of production. That means doing everything they can to reduce headcount, with no surprise that the result is reduced headcount.
Yes, loss of tax credits is a hit. One reason to not have them, which Musk has acknowledged. Insofar as they existed, no surprise people used them.
Yes, electric cars are desirable. Maybe not for everyone, but not for nobody either. If they can hit break-even with ICE vehicles, crossover purchases will be significant.
I had an EV for a couple years. Y’all naysayers don’t know what you’re missing.
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