After the announcement of production changes last month, Tesla is cutting thousands of jobs to reduce costs while increasing production of the lower-priced, less-profitable Model 3 sedan. This is the second job cut in seven months. Last June, the company planned to cut 9 percent of its workforce. The current job cuts will include a reduction of full-time employees, but retain critical temps and contractors. With a workforce of 45,000 employees, a 7 percent cut would be around 3,150.
Chief Executive Officer Elon Musk said the company would need to deliver at least the mid-range Model 3 in all markets starting around May. The Model 3 is the model that will create security in sales, but Musk has been under pressure to stabilize the production.The ideology is to make Tesla affordable to more customers. Tesla has found achieving long-term profitability difficult. Musk has an inconsistency in delivering results on set goals.
Tesla sales were boosted by the $7,500 federal tax credit on electric vehicles throughout 2018. The full tax credit ended with 2018, and new buyers will only be able to utilize half of that in coming years. The company did send an email out to all employees explaining the situation in detail and excitement for things to come.
Written by: Andee Oehm
Image Credit: Tesla