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Tesla to reduce work force 7%; Musk expects 'tiny' Q4 profit


jpd80

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Tesla to reduce work force 7%; Musk expects 'tiny' Q4 profit

January 18, 2019 06:36 AM updated an hour ago

Reuters via https://www.autonews.com/manufacturing/tesla-reduce-work-force-7-musk-expects-tiny-q4-profit

Tesla Inc. plans to cut 7 percent of its work force as the electric automaker looks to trim costs and be consistently profitable while it ramps up  production of the Model 3 sedan.

The company didn't identify an actual number of jobs being cut, but in an October tweet, CEO Elon Musk said Tesla's workforce stood at 45,000 people. A 7 percent cut equates to 3,150 jobs. 

"Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months," Musk wrote in a Jan. 18 email to employees that was published on the company's blog.

"There isn't any other way," he said.

 

Full article at story link above........

 

Tesla can try reducing staff but the vehicles has many time consuming and labor intense intermediate steps that undermine cost efficiency in other areas.

 

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Bigger issues they have is their convertible debt that comes due at $360 a share, they will have to pay cash for that or issue more stock with the current stock price. The cash payment will take most of the cash they have on hand. This year is when things are going to get real for Tesla. 

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If Tesla can only squeak a small profit with such a highly skewed sales mix, then no wonder Musk said the company would go broke building $35K Tesla 3s..

As people's names come up in the build queue, they are told the vehicle is $48K or they can wait down the queue for their $35K car...that sucks.

Edited by jpd80
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13 hours ago, jpd80 said:

If Tesla can only squeak a small profit with such a highly skewed sales mix, then no wonder Musk said the company would go broke building $35K Tesla 3s..

As people's names come up in the build queue, they are told the vehicle is $48K or they can wait down the queue for their $35K car...that sucks.

Perhaps, but part of the problem was the manpower used to ramp up production of the model 3.  Clearly they were using a lot of overtime and inefficiency in ramping up.  If they can get the man-hours down to build a car they should be able to make a profit at lower sales costs.

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I think musk has been drunk tweeting at 1am in the morning and people are beginning to think he’s signalling the end of Tesla is near.

i don’t know about that but Musk is Tesla’s biggest liability, especially when he says things that are not helpful 

Edited by jpd80
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2 hours ago, jpd80 said:

I think musk has been drunk tweeting at 1am in the morning and people are beginning to think he’s signalling the end of Tesla is near.

i don’t know about that but Musk is Tesla’s biggest liability, especially when he says things that are not helpful 

Do you have examples of his tweets? I looked at his Twitter account and don't see anything posted around that time as you mentioned, unless he deleted them. Then again, I don't have a Twitter account and can only see his posts he set to Public.

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Elon Musk Sent an Email to Employees at 1:20 in the Morning, and It Just May Signal the End of Tesla

https://www.tesla.com/blog/tesla-company-update

 


 

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However, starting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles. Moreover, we need to continue making progress towards lower priced variants of Model 3. Right now, our most affordable offering is the mid-range (264 mile) Model 3 with premium sound and interior at $44k. The need for a lower priced variants of Model 3 becomes even greater on July 1, when the US tax credit again drops in half, making our car $1,875 more expensive, and again at the end of the year when it goes away entirely.


Sorry for all these numbers, but I want to make sure that you know all the facts and figures and understand that the road ahead is very difficult. This is not new for us – we have always faced significant challenges – but it is the reality we face. 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. 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.
As a result of the above, 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. 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 mile), standard interior Model 3 at $35k and still be a viable company. There isn't any other way.
To those departing, thank you for everything you have done to advance our mission. I am deeply grateful for your contributions to Tesla. We would not be where we are today without you. The China factory took your jobs... sorry...


For those remaining, although there are many challenges ahead, I believe we have the most exciting product roadmap of any consumer product company in the world. Full self-driving, Model Y, Semi, Truck and Roadster on the vehicle side and Powerwall/pack and Solar Roof on the energy side are only the start.
I am honored to work alongside you.
Thanks for everything,
Elon


 

 

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9 hours ago, jpd80 said:

...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.

You know, it really ticks me off when companies do this.  I get it that temps and contractors can be cheaper and more cost effective, but dammit, full-time folks should be viewed as more important at times like these, and keep them around first.  And I'm a contractor that has been kept around while full-time folks were let go...

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2 minutes ago, fordmantpw said:

You know, it really ticks me off when companies do this.  I get it that temps and contractors can be cheaper and more cost effective, but dammit, full-time folks should be viewed as more important at times like these, and keep them around first.  And I'm a contractor that has been kept around while full-time folks were let go...

Completely agree for regular contractors and temps for sure, but sometimes you hire a contractor because they have a skillset you need but don't have.  So I could see keeping them in that case.  However, a good manager would be training the employees to do that work so that you don't need the contractor at some point.

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11 minutes ago, fordmantpw said:

You know, it really ticks me off when companies do this.  I get it that temps and contractors can be cheaper and more cost effective, but dammit, full-time folks should be viewed as more important at times like these, and keep them around first.  And I'm a contractor that has been kept around while full-time folks were let go...

This is why the UAW wants to unionize them. Problem is UAW international leadership has their heads so far up their asses they don't know how to organize a workforce that large anymore. 

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1 hour ago, akirby said:

Completely agree for regular contractors and temps for sure, but sometimes you hire a contractor because they have a skillset you need but don't have.  So I could see keeping them in that case.  However, a good manager would be training the employees to do that work so that you don't need the contractor at some point.

Good point, and I agree.

1 hour ago, fuzzymoomoo said:

This is why the UAW wants to unionize them. Problem is UAW international leadership has their heads so far up their asses they don't know how to organize a workforce that large anymore. 

The UAW has gotten so far away from representing the workers for the true, intended purpose of unions that it isn't funny.  Too many leaders just have their hand out looking to better themselves and not for the good of the people.  Wait, was I talking about unions or politicians?

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48 minutes ago, fuzzymoomoo said:

This is why the UAW wants to unionize them. Problem is UAW international leadership has their heads so far up their asses they don't know how to organize a workforce that large anymore. 

Unions can't stop companies from cutting workforce to stay competitive on costs.  The alternative is the company goes out of business and nobody has a job.   That's why the UAW agreed to the two tier system.   The only way a union can force higher wages and benefits is if it controls the entire market - like Detroit used to.   It doesn't matter if you overpay the workers or you have too many workers as long as your competition has the same cost structure.

Workers in non-union plants are generally paid a higher than average wage and benefits compared to other similar jobs in those areas so the workers are happy and don't see a need for the overhead and drama that the union would bring.

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12 minutes ago, akirby said:

Unions can't stop companies from cutting workforce to stay competitive on costs.  The alternative is the company goes out of business and nobody has a job.   That's why the UAW agreed to the two tier system.   The only way a union can force higher wages and benefits is if it controls the entire market - like Detroit used to.   It doesn't matter if you overpay the workers or you have too many workers as long as your competition has the same cost structure.

Workers in non-union plants are generally paid a higher than average wage and benefits compared to other similar jobs in those areas so the workers are happy and don't see a need for the overhead and drama that the union would bring.

Your right, but what a union can do is prevent what Tesla is doing by forcing them to keep their workers and get rid of the contractors and temps first.

Oh wait Nevermind, the UAW turns a blind eye when it comes to rules regarding temps. Carry on. 

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I have a $100 bet with a Tesla fan coworker of mine. I made this bet with him 2 years ago. I actually think I will lose because I said by 2020 they will either be bankrupt or  be bought. I am starting to think it will happen IN 2020.

The fact is with the tax credit expiring and more competitors, 2020 seems to be the year they will lose their MOJO sales wise. I think Tesla is a great electric vehicle, but the company is run by a bunch of morons that have no business mass producing a car.  Musk even admitted that they were really close to bankruptcy this past summer. I just don't see how it gets better for them.

Edited by jcartwright99
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35 minutes ago, jcartwright99 said:

I have a $100 bet with a Tesla fan coworker of mine. I made this bet with him 2 years ago. I actually think I will lose because I said by 2020 they will either be bankrupt or  be bought. I am starting to think it will happen IN 2020.

The fact is with the tax credit expiring and more competitors, 2020 seems to be the year they will lose their MOJO sales wise. I think Tesla is a great electric vehicle, but the company is run by a bunch of morons that have no business mass producing a car.  Musk even admitted that they were really close to bankruptcy this past summer. I just don't see how it gets better for them.

If the Shanghai plant comes on line and they can start building the model Y that is how it gets better. Of course if they did go bk or were bought that would probably only make them stronger.

Edited by msm859
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