© Tesla Electronics Production | January 21, 2019
Tesla starts the year with layoffs – 3000 employees to go
In an open letter to Tesla employees, CEO Elon Musk says that the electric carmaker is laying off 7% of its full-time employee headcount.
“As we all experienced first-hand, last year was the most challenging in Tesla’s history. However, thanks to your efforts, 2018 was also the most successful year in Tesla’s history,” the CEO starts off the letter. And it was a successful year for the auto company, Tesla delivered almost as many cars as it did in all of 2017 during the last quarter alone; and looking at the entire year, Tesla delivered nearly as many cars as if had in its entire existence before that. However, looking ahead the company is facing a number of challenges. One of these challenges takes the form om established car companies moving into the electric arena with full force. “While we have made great progress, our products are still too expensive for most people. Tesla has only been producing cars for about a decade and we’re up against massive, entrenched competitors. The net effect is that Tesla must work much harder than other manufacturers to survive while building affordable, sustainable products,” the CEO writes. As a result of the challenges that the company is facing, Tesla has made the choice to reduce full-time employee headcount by approximately 7% (according to Mr. Musk Tesla grew by 30% last year, which is more than it can support) and retain only the most critical temps and contractors. 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 the company to achieve the economies of scale required to manufacture the standard range, standard interior Model 3 at USD 35’000 and still be a viable company. The staff reduction of 7% corresponds to approximately 3'150 of Tesla's approximately 45'000 employees.