Tesla, electric car maker is laying off 7% of its staff according to a letter sent to employees by Elon Musk, Tesla CEO. The workforce reduction is ramp up the “Model 3 variant” production in the global market. “We, unfortunately, have no choice but to reduce full-time employee headcount by approximately 7% (we grew by 30% last year, which is more than we can support) and retain only the most critical temps and contractors,” wrote Musk.
“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 Tesla to achieve the economies of scale required to manufacture the standard range (220 miles), standard interior Model 3 at $35k and still be a viable company. There isn’t any other way,” he added.
He also tried to console the employees to be laid off saying that, “There are many companies that can offer a better work-life balance because they are larger and more mature or in industries that are not so voraciously competitive.” He says that building clean, affordable energy products required endless effort and relentless creativity. Therefore it is necessary to put in extreme hard work to develop these products.
This announcement is following other cost-cutting efforts by Tesla. The long-standing customer referral program that was run by the company will end on February 1 because it was adding costs of the cars.
CNBC reported that Tesla premarket share prices fell by 6% following the news.
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