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Tesla to lay off thousands of employees due to 'very difficult' road ahead

“Our products are too expensive for most people,” Elon Musk said.

Tesla CEO Elon Musk
Tesla CEO Elon Musk
Image: Patrick Fallon/Zuma Press/PA Images

TESLA CEO ELON Musk has confirmed that 7% of the company’s employees are set to lose their jobs, saying there’s a “very difficult” road ahead.

The electric car and solar panel maker notified its employees about the staff cuts and other plans in a memo.

Musk said Tesla hopes to post a “tiny profit” in the current quarter, but that a 30% expansion in its workforce last year was more than it can support.

Tesla’s shares tumbled earlier this month after it cut vehicle prices by $2,000 (about €1,750) and announced fourth-quarter sales figures that fell short of Wall Street estimates.

“Our products are too expensive for most people,” Musk said in the memo to Tesla staff, saying the company has to “work harder”.

“Tesla has only been producing cars for about a decade and we’re up against massive, entrenched competitors,” he said.

Musk said in a tweet in October that Tesla, based on Palo Alto, California, had 45,000 employees. A 7% cut would involve laying off about 3,150 people.

“We unfortunately have no choice but to reduce full-time employee headcount by approximately 7 percent … and retain only the most critical temps and contractors,” he said in the memo. 

It was recently announced that another of Musk’s companies, SpaceX, is laying off more than 6,000 employees “due to the extraordinarily difficult challenges ahead“.

Model 3 

The company said it delivered over 245,000 electric cars and SUVs last year, nearly as many as all previous years combined. But its 2018 production fell far short of a goal set nearly three years ago of manufacturing 500,000 vehicles for the year.

That goal was announced in May 2016 based on advance orders for its mid-range Model 3, which Musk said sells for $44,000 (about €38,500).

Musk said Tesla plans to ramp up production of the Model 3 “as we need to reach more customers who can afford our vehicles”.

Attempting to build affordable clean energy products at scale necessarily requires extreme effort and relentless creativity, but succeeding in our mission is essential to ensure that the future is good, so we must do everything we can to advance the cause.

Tesla broke ground earlier this month for a factory in Shanghai, its first outside the United States. Musk said it plans to begin production there of the Model 3 and a planned crossover by the year’s end.

Tesla and other global automakers including General Motors Co, Volkswagen AG and Nissan Motor Corp are pouring billions of dollars into manufacturing electric vehicles in China.

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