Tesla cuts 7% of workforce to boost margins and production

CEO Elon Musk says in internal email that Tesla “will need to make these cuts while increasing Model 3 production”

Tesla will cut its full-time workforce by around 7% in a move to reduce costs and allow production of the Model 3 to be ramped up, according to an email sent to employees by Elon Musk.

The CEO of the American electric car maker claimed it “will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months”.

Musk also wrote that the apparent workforce growth of 30% last year is “more than we can support”, so Tesla intends to retain just “the most critical” contractors and temporary workers.

 

The email, sent to all full-time staff, cites Tesla’s “first meaningful profit”, of 4% in the third quarter of 2018, in the fifteen years the company has been established. However, that profit was due to the company selling only higher-priced variants of the Model 3 in North America, and Musk stated a need “to reach more customers who can afford our vehicles” by rolling out mid-range variants from May. 

Last June, Tesla cut around 9% of its workforce, again as a cost-reduction tactic. However, the workforce was built back up to similar levels by the end of the year. Reportedly, the firm currently employs 45,000 people worldwide. 

Musk also wrote that “higher volume and manufacturing engineering improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard-range (220-mile), standard-interior Model 3 at $35,000 and still be a viable company”.

Read more: 

Tesla Model 3 production hits 5000 units per week just before deadline

Tesla Model 3 review



Source: Autocar Online

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