Tesla has announced further job cuts. Around seven per cent of full-time jobs would have to be cut to further reduce costs, CEO Elon Musk explained in an e-mail to the employees. Tesla had already announced in June 2018 that it would lay off around nine per cent of employees.
After Tesla recorded a profit in the third quarter of 2018 for the second time in its company history, the electric car manufacturer will also be in the black in the fourth quarter, according to preliminary figures. However, the quarter’s projected profit will be lower than in the previous quarter. Tesla also plans to offer the mid-range version of the Model 3 in all global markets starting in May.
Last year Tesla had expanded its workforce by 30 per cent. With a current workforce of about 45,000 Tesla employees, the announced staff reduction would cost around 3,150 people their jobs. Musk writes: “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.”
As a further cost-cutting measure, Musk recently announced that the company would be cutting their customer referral programme, which provides perks such as free charging, as the additional cost was deemed too much for the carmaker. Meanwhile, the production framework needs to be improved further. The path that now follows will be very challenging, for the current quarter the Tesla boss speaks of a “tiny profit” if at all. According to Musk, the fact is that most people find Tesla electric cars too expensive – in a situation of massive competition.