Tesla to cut jobs as cars 'too expensive'

19 January, 2019, 09:19 | Author: Sally Reid
  • Tesla plans 7% staff cut and says the road ahead ‘is very difficult

But he added it was hard to make Teslas with their new and developing technology as cheaply as conventional cars, and the firm's cars were still "too expensive for most people".

Tesla is reducing its workforce by 7 percent - more than 3,000 jobs, according to a recent staffing estimate - as the company continues its efforts to bring lower-cost electric vehicles to market. "There isn't any other way". Bloomberg reported Friday that Tesla had about 45,000 staff in 2018, so the 7-percent cut could represent as many as 3,150 jobs.

"Last year was the most challenging in Tesla's history", Mr Musk said. That goal was announced in May of 2016 based on advance orders for its mid-range Model 3, which Musk said sells for $44,000.

He highlighted the company's 4 percent third-quarter profit and said it expects a smaller one for the fourth quarter, pointing to the higher-priced Model 3 variants in the U.S. market as the cause. Though results for Q4 aren't quite settled yet, he says that "preliminary, unaudited results indicate that we again made a GAAP profit, be less than Q3". With tens of thousands of Americans waiting for the vehicle, Tesla was able to offer the highest-priced versions of the Model 3 first and enjoy a correspondingly fat profit margin.

Musk peppered good news throughout the letter, pointing out that 2018 was Tesla's most successful year and the Model 3 was 2018's best-selling luxury vehicle.

Musk said it plans to begin production there of the Model 3 and a planned crossover by the year's end.

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The company's 5.3 per cent bonds due 2025 opened trading Friday sharply lower, one of the biggest losers in the high-yield market.

Given rising costs and competitive pressures, cutting staff is a "practical, traditional" step for Tesla to take, says Jessica Caldwell, the executive director of industry analysis at Edmunds.

The company says it delivered over 245,000 electric cars and SUVs last year, almost as many as all previous years combined. The company was stuck in "production hell", as Musk dubbed it, as Tesla raced to produce 5,000 Model 3 sedans - it's most affordable vehicle - per week, a goal it ultimately reached.

The successful Tesla referral program that has seen buyers of the automaker's electric cars recruit other customers by giving both recruiter and new buyer 6 months of free EV charging is coming to an end.

The company said it would reduce full-time employee headcount by about 7 percent and retain only the most critical temps and contractors.

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