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| Tesla Will Cut 7% of Work Force to Lower Model 3 Cost | |
| (about 1 hour later) | |
| Tesla is reducing its full-time work force by 7 percent as it tries to lower the cost of making its Model 3 sedan, the company’s chief executive, Elon Musk, told employees on Friday. | Tesla is reducing its full-time work force by 7 percent as it tries to lower the cost of making its Model 3 sedan, the company’s chief executive, Elon Musk, told employees on Friday. |
| Tesla also plans to ramp up production and improve the design of the electric car, which currently costs $44,000 for its most affordable version, Mr. Musk said in an email. “There isn’t any other way” to “achieve the economies of scale” necessary to sell the Model 3 for $35,000 while remaining viable, he wrote. | |
| Tesla stock slumped more than 8 percent in premarket trading on the Nasdaq stock exchange. | Tesla stock slumped more than 8 percent in premarket trading on the Nasdaq stock exchange. |
| The job cuts, which could affect more than 3,000 people, come after a 9 percent reduction in June. Last year “was the most challenging in Tesla’s history,” Mr. Musk wrote on Friday, adding that “the road ahead is very difficult.” | |
| Another one of his companies, the private rocket maker SpaceX, also said this month that it was cutting about 10 percent of its work force. | |
| Tesla recorded its first quarterly profit in two years, and its largest ever, in its third quarter, aided by cost-cutting, delayed payments to suppliers and a surge in production and sales. The company expects to earn a smaller profit in the fourth quarter, based on preliminary, unaudited results cited by Mr. Musk. | Tesla recorded its first quarterly profit in two years, and its largest ever, in its third quarter, aided by cost-cutting, delayed payments to suppliers and a surge in production and sales. The company expects to earn a smaller profit in the fourth quarter, based on preliminary, unaudited results cited by Mr. Musk. |
| “This quarter will hopefully allow us, with great difficulty, effort and some luck, to target a tiny profit,” he wrote. | |
| The electric-car maker lowered prices on all of its vehicles by $2,000 this month as a federal tax credit for its vehicles — worth $7,500 last year — began to phase out. | The electric-car maker lowered prices on all of its vehicles by $2,000 this month as a federal tax credit for its vehicles — worth $7,500 last year — began to phase out. |
| The company can keep only crucial contract workers as it faces the challenge of making its products competitive with vehicles that run on fossil fuels, Mr. Musk wrote. | |
| “While we have made great progress, our products are still too expensive for most people,” he wrote. | “While we have made great progress, our products are still too expensive for most people,” he wrote. |
| Traditional automakers such as Ford, General Motors and Nissan are pushing harder into the electric-vehicle market, pressuring Tesla as it struggled through a Model 3 production and delivery process that Mr. Musk has often described as “hell.” | |
| As the company’s struggled to meet its manufacturing and financial targets, Mr. Musk’s behavior caused distractions. | |
| In August, he wrote in a short, cryptic post on Twitter that he was thinking about taking Tesla private and had secured funding, surprising board members and driving up the stock price. | |
| The Securities and Exchange Commission later sued him in federal court, saying that he had misled investors. Mr. Musk settled with the agency, agreeing to pay a $20 million fine and step aside as chairman for three years. | |
| In August, he said that the past year had been “excruciating.” |