Tesla plans seven per cent staff cut, says road ahead very hard


Tesla's results for the fourth quarter have yet to be announced, but investors were disappointed earlier this month when the company revealed it delivered fewer cars than expected despite attempts to boost production.

To help the company maintain profitability, Tesla is adopting Q3 2018's strategy this quarter, with the electric auto maker pushing the Model 3 Performance and the Long Range Model 3 AWD to customers in Europe and China.

The company's goal is "important for all life on Earth", he told employees Friday.

'But succeeding in our mission is essential to ensure that the future is good, so we must do everything we can to advance the cause'. Musk said in a CBS interview in December that the company was "not that far from being able to produce the $35,000 auto", adding that it would "probably be ready in about five or six months". As Tesla starts deliveries of more affordable Model 3 variants, naturally profit will be affected.

Musk speaks rather bluntly about the hard road ahead for Tesla in his email, but should everything go according to plan, we should see the mid-range Model 3 launch in all markets around May.

Complicating matters is that United States government incentives for buying electric vehicles will be halved on July 1st and go away entirely at the end of the year, meaning consumers will ultimately be paying more to own one of these cars.

Then there's the rise of competition. It is also the mainland's first electric vehicle factory wholly owned by a foreign investor as Beijing pledges to further open up its auto manufacturing industry to display its resolve in promoting globalisation. Tesla dominates that market, but it wants to make electric vehicles for the masses.

In the letter, Musk brings up several numbers when describing the company's growth, including employee count.

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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.

He said that 7 per cent of the workforce would be cut.

Which is to say, it's a bit of a surprise - considering that Musk is not exactly renowned for being practical or traditional.

For those remaining, although there are many challenges ahead, I believe we have the most exciting product roadmap of any consumer product company in the world. But as months passed, the company ramped back up, ultimately growing by 30 percent - which turned out to be unsustainable, Musk says.

Last year, Elon Musk boasted that the company's staff totaled 45,000 people, which means that the pending cut would put 3,150 out of work.

Tesla shares dropped to as low as $320.40 shortly after the open, costing Musk more than $800 million on paper, according to the Bloomberg Billionaires Index.

FILE- In this July 6, 2018, file photo, a prospective customer confer with sales associate as a Model 3 sits on display in a Tesla showroom in the Cherry Creek Mall in Denver.