Tesla has a problem. The Model 3 is a very expensive utility to sell it en masse. So to lower the price, the electric car manufacturer announces a job cut that will affect 7% of the workforce. Elon Musk, its founder and CEO, admits that this cost reduction is necessary in order to remain a viable company and face a growing competition, "there is no other way".
"The road ahead is very difficult," he warns in an internal communication to his employees. A few weeks ago he already announced a reduction of $ 2,000 in the vehicles he sells in the US, to partially absorb the reduction of federal incentives for the purchase of electric vehicles. The tax credit was reduced from January 1 to the middle, to $ 3,750.
He did this coinciding with the publication of the deliveries he made in the fourth quarter, which were below the expectations of Wall Street. Analysts do not see that Tesla is facing a demand problem. The company is entering new markets with the Model 3 and offers different configurations. But they still see difficulties on the production side.
Tesla assembled 86,555 units of the three models in the fourth quarter, of which 61,394 corresponded to Model 3. Musk insists that achieving greater volume and improvements in the manufacturing process is "crucial" to achieve the economies of scale it needs to be a viable company In this sense, he anticipated changes in the production model that continues in Palo Alto in the coming months.
The exact number of employees affected by the cut is not indicated, although it would be close to the 3,400 employees if one takes into account that Tesla had at the end of last year with a workforce of 49,000 workers. The manufacturer's shares fell about 10% after the announcement. They are practically flat if the price of the last 12 months is taken as reference.
While waiting for it to officially present its results for the close of the year, the company anticipates that it will close the fourth quarter in profits although the profit will be lower than the one obtained in the previous one. Investors try to understand how the investments they are making to expand production capacity affect the cash they have on hand to respond to the payment of the debt.