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Tesla Is Cutting 7 Percent of Its Workforce To Reduce Model 3 Price (cnbc.com)
Tesla CEO Elon Musk announced today that the company would cut 7% of its workforce in order to cut costs as the company prepares to ramp up production and boost margins as they get closer to releasing the long-awaited $35,000 version of the Model 3. CNBC reports: Musk says Tesla faces "an extremely difficult challenge" in making their products a competitive alternative to traditional vehicles, adding that he expects Q4 profit to come in significantly lower than Q3. Five experts weigh in on whether it's a challenge Musk and Tesla can overcome:
- Oppenheimer managing director Colin Rusch agrees with Jed Dorsheimer on Tesla's job cuts, but isn't bullish on what they'll accomplish.
- Canaccord Genuity's Jed Dorsheimer thinks the workforce cut is just fine, calling it "clean-up" after the company's latest push to ramp up Model 3 production came with a wealth of new hires.
- "They're certainly in a better position than they were eight or nine months ago," says ROTH Capital's Craig Irwin. "Where we're going to see pressure on the stock today is the 'copy-paste' expectations of Q3 going through 2019 need to be reset."
- Needham's Raji Gil thinks that Tesla may have overestimated how many people can actually afford a high-end electric vehicle. "Clearly, in my mind, they have an issue with demand," says Rusch, " If you do the math, you have to conclude that 90 percent of the reservations that have been built up over the past couple of years are folks that wanted the standard battery version of the vehicle, which is $35,000."
- Westly Group founder Steve Westly loves where Elon Musk's company is right now, calling Tesla "the iPhone of electric vehicles," and saying they're well ahead of the game when it comes to a quickly-changing auto market.
- Oppenheimer managing director Colin Rusch agrees with Jed Dorsheimer on Tesla's job cuts, but isn't bullish on what they'll accomplish.
- Canaccord Genuity's Jed Dorsheimer thinks the workforce cut is just fine, calling it "clean-up" after the company's latest push to ramp up Model 3 production came with a wealth of new hires.
- "They're certainly in a better position than they were eight or nine months ago," says ROTH Capital's Craig Irwin. "Where we're going to see pressure on the stock today is the 'copy-paste' expectations of Q3 going through 2019 need to be reset."
- Needham's Raji Gil thinks that Tesla may have overestimated how many people can actually afford a high-end electric vehicle. "Clearly, in my mind, they have an issue with demand," says Rusch, " If you do the math, you have to conclude that 90 percent of the reservations that have been built up over the past couple of years are folks that wanted the standard battery version of the vehicle, which is $35,000."
- Westly Group founder Steve Westly loves where Elon Musk's company is right now, calling Tesla "the iPhone of electric vehicles," and saying they're well ahead of the game when it comes to a quickly-changing auto market.
So you lay off 7% last year, then grow 30% (according to Mr. Musk's email), then lay off 7% again?
Perhaps a little more care should be paid to not hiring more people than your business can support.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
American workers will be fired by the company Tesla due to the new businesses that had Elon Musk with China. It's a rumor that Elon Musk was very interested in the Chinese batteries and the new Tesla factories in China.
The American workers are not happy with the new measures of the company Tesla.
Elon Musk ignored the Trump's policy: "America First!".
You're Fired!
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10% at SpaceX... Elon Musk ventures are not smelling as good as they once did :-/ Maybe he's not the savior as once portrayed.
With all the problems that Tesla has been having with employees, assuming the news weren't just inflated by the shorters, I would have taken the chainsaw to the payroll a long time ago...
And moved out of California.
This is part of Tesla's pivot to China. China is the world's largest market for electric vehicles, and they have been courting Tesla aggressively, offering incentives and relocation assistance.
Tesla is tapering off its US based workforce to focus on building a robust presence in Asia, China most especially, which is poised to displace the US as the world's major power. Tesla realizes it cannot survive in the long term with such a heavy focus on the US market, and it must pivot to China as a top priority to remain in the game.
and boost production?
If they've gotten the kinks with their automation processes worked out yeah, that'll work. It's 7%, so it wouldn't surprise me either. That's a small enough (and specific enough) number that I could believe they fixed one of their broken automation processes.
We should probably start figuring out what we're gonna do with all the folks laid off. Assuming this works out then if Tesla can do it the other car companies can. Oh well, guess all those laid off blue collar guys can go be HVAC & Welders...
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According to wikipedia, they have about 45k employees (2018). So about 3k. Maybe about a 100 million annual savings (give or take many millions)? Musk and Tesla together are set to pay $40 million in fines because of the "I have a buyer" tweet - just a single tweet. Maybe the other 60 million remaining (from firing 7%) is to pay for future tweets.
They haven't figured out automation either. The real reason is the Musk/SpaceX/Tesla shell game/Ponzi scheme is falling apart. They need to reduce costs to make debt payments.
Electric is the future for a clean environment. We absolutely need a new tax credit to keep manufacturers producing and selling more electric cars. China is years ahead of the U.S. is solar already and will end their dependence on fossil fuels much sooner than the U.S. If the U.S. doesn't catch up now it will be left with a failing economy and dying earth.
Their problems right now are in production. You lower the price to get more people to buy your product. But demand already exceeds supply.
This doesn't made sense unless they are trying to do a quasi ponzi scheme through getting more money from more people paying the prepaid down-payment.
At this point I am beginning to doubt Tesla. They have a great product. But for all their troubles their assembly line should be finished as they have had more than enough time. How do other car manufacturers do it and how did the Japanese start their companies after us Americans if it's this hard? I'm not buying it.
I think the truth is the required performance batteries are hard to manufacture at the advertised price point. They are trying to leverage presale numbers to satisfy their investors and expecting a magical manufacturing breakthrough. I think they need a new CEO to put on the breaks and realistically raise prices and or do a limited bankruptcy.
One solution I suggest is selling the auto bodies of their cars without the batteries. Ditch the auto driving feature into another company and let people hack their own cars and hence assume full liability. They are attractive car bodies. Is there no way to retrofit them for a fuel cell engine? Bring the fun back.
Thought so, it's not rocket science.
The layoff was across the entire company. There's people in the Energy business that are packing their shit out to the parking lot.
This layoff was NOT about car manufacturing.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
Cars of similar class to the model 3 cost about $10k less than what the model 3 is going for.
Given that most people spend, on average, about $1200 to $1500 per year on gasoline, it could take up to almost 9 years before you'd even *start* to see any return on that investment over and above what you would have spent on an ICE vehicle, and that's further assuming that your electricity usage with an EV is somehow negligibly impacted.
Oh, and that 9 years is complicated by the fact that you probably have to spend another $8k on a battery at around that time so you are looking at waiting another 6 or so years to see a positive return again. Sure, in the long run it will still be cheaper to own, but the sheer amount of time you have to continue to use it before it will actually have a lasting impact how much you spend for your chosen lifestyle is so long that for most people, it's simply not worth the bother.
Purchase prices need to come down to be competitive on a class-for-class basis before they can be taken seriously by people.
File under 'M' for 'Manic ranting'
So how much cheaper would the cars be if Tesla (and Musk) hadn't pissed away money on SEC fines this year?
That is one advantage of humans over robots. Robots cost too much initial cost, once installed the running cost is low. Humans can be hired quickly and made to adapt to changing and varying demands quickly. They are adaptable, but once the job is done, they can be sent home.
Tesla is still under serious pressure for cash and it is not able to tap into the capital markets. It needs to prove it can do day to day operations and be GAAP earning positive for a few quarters. Only then the capital pressure will ease and it can tap in again.
This email says 18Q4 is also positive, but not as much as 18Q3. That is not a serious problem. It needs to make 400 million in 18Q4 + 19Q1. Once 18Q1 rolls off the trailing four quarter, it has a shot at being positive earnings in the trailing four quarters. That will make it into SP500. Serious index fund investing. Will remove the shorts completely and it will be able to borrow again. Till then it has to operate on such drastic measures.
Things must be pretty ok inside, it looks like. There is not twitter eruptions from Elon.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Anyone watching RichRebuilds' adventure in getting his used Model X knows that there seems to be a ton of useless folks within Tesla. The real question is will they fire the right people.
If the battery costs about $8K, and the electric motors should be cheaper than an ICE, I would expect a surcharge of about $4K, not $10K.
The trouble for Telsa is when battery prices halve again, all the big manufacturers will be making electric cars, and they have experience at keeping costs very low.
Profits down, shipments below their 5K/week goal they "hit" in Q3, sales stagnating - it's what you do when you are running out of cash and have more capacity than sales. You cut workers.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
No, it is simply about getting rid of the rif-raf/ppl that do not match to the job/company. This is common in the tech industry. We do it ALL THE TIME.
What is funny is that you can bet on it that they will go right back to hiring ppl within 2 months. I would not be the least bit surprised if a number of the skilled are brought back on Contract for 6 months, then re-hired.
Windbourne ( moderating ).
Next to Solyndra employment at Tesla is booming.
Electric motors, steering components, suspension components, brakes, air conditioning- all these systems are found in Teslas and will wear out. The question is when. I agree that there are fewer systems to maintain, but battery replacements won't be your only problem!
Alcohol, Tobacco and Firearms should be the name of a store, not a government agency.
Thats going to be a lot fo unhappy robots..
If China reduces or outright stops their purchase of fossil fuels (extremely unlikely but I will play along) then world wide oil prices will crash HARD and any fossil fuel based economy will sky rocky due to cheap energy costs. And oh yeah as a side benefit, shitty places all over the Middle East will collapse back to the 8th century right where they were just before oil was found there.
Your knowledge of global macroeconomics economics is... lacking.
Yea we know why you didn't log in.
Because you are a musk fagboy.
Everything you said is incorrect.
Reducing fossil fuels by pushing electric is extremely unlikely.
Fucking Trumpanzees.
numbnuts
Except no.
When's the last time you heard of Oracle, Apple, Amazon, Facebook, Google, Cisco announcing a 7% layoff to "clean out the riff-raff"?
Oh yeah, that was back on the first of never.
Also, Tesla has a performance review process, and they are not ashamed to cut people that don't make the grade - they did it in November 2017. There were even stories on Slashdot about it.
You are kind of a fucking idiot.