Title : Elon Musk to sack thousands of workers, saying Tesla cars are 'too expensive'
link : Elon Musk to sack thousands of workers, saying Tesla cars are 'too expensive'
Elon Musk to sack thousands of workers, saying Tesla cars are 'too expensive'
Thousands of jobs at Tesla are set to be slashed, with chief executive Elon Musk telling employees the electronic cars they produce are "too expensive".
Key points:
- Mr Musk said Tesla needed to shed seven per cent of its workers
- The company is setting its sights on producing cheaper cars and Mr Musk wants to cut costs
- Share prices fell by 11 per cent after the job cut were announced
Mr Musk says the company needs to expand its customer base to survive and wants to make vehicles for the masses.
Tesla's cheapest car right now is the Model 3, which costs about $60,000.
"We face an extremely difficult challenge: making our cars, batteries and solar products cost-competitive with fossil fuels," he said in a letter to staff.
"While we have made great progress, our products are still too expensive for most people."
He said that 7 per cent of the workforce would be cut.
In October, Mr Musk said that Tesla, based in Palo Alto, California, had 45,000 employees.
That means that as many as 3,150 employees will lose their jobs in this latest round of cuts.
Shares tumbled by 11 per cent after the letter went public.
A tough year for the company
In his memo to workers, Mr Musk said 2018 was the "most challenging in Tesla's history".
The company delivered more than 245,000 electric cars and SUVs last year, nearly as many as all previous years combined.
But it still fell far short of a goal set nearly three years ago of manufacturing 500,000 vehicles for the year.
The company had hired 30 per cent more employees last year to meet production goals, which was more than it could support and the workforce was cut by 9 per cent in June.
"I want to make sure that you know all the facts and figures and understand that the road ahead is very difficult," Musk said.
"There isn't any other way."
Tesla posted a $311 million quarterly profit in October, only its third profitable quarter in eight years as a public company.
Musk acknowledged that the profit was driven by its ability to sell higher priced vehicles in North America.
Tesla dominates that market, but it wants to make electric vehicles for the masses.
And while preliminary numbers indicate another profitable quarter ahead, Musk said it appears to be a smaller.
Cars for the average buyer
It has been Tesla's long-held goal to get a less-expensive, mid-range Tesla Model 3 on the road.
"Starting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles," Mr Musk said in the letter.
The key for Tesla is producing an entry-level car under $50,000, which would put it in direct competition with major automakers.
Yet producing a more affordable car has only grown more difficult.
The US had put into place a tax incentive for people to buy electric cars, cutting the ticket price by about $10,000.
But President Donald Trump and other Republicans consider the credit a waste of taxpayer money and want it eliminated.
That incentive was reduced to about $5,000 this month and it will be cut to zero by the end of the year.
Challenges elsewhere
Mr Musk's rocket company SpaceX has also seen recent job cuts.
On January, a spokesman for the company said the workforce would be reduced by about 10 per cent.
The spokesman cited "extraordinarily difficult challenges ahead" for the company, which is made up of more than 6,000 employees.
"To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet, SpaceX must become a leaner company," the spokesman said.
"Either of these developments, even when attempted separately, have bankrupted other organizations."
ABC/Wires
Thus Article Elon Musk to sack thousands of workers, saying Tesla cars are 'too expensive'
You are now reading the article Elon Musk to sack thousands of workers, saying Tesla cars are 'too expensive' with the link address https://coneknews.blogspot.com/2019/01/elon-musk-to-sack-thousands-of-workers.html
0 Response to "Elon Musk to sack thousands of workers, saying Tesla cars are 'too expensive'"
Post a Comment