Tesla CEO Ilon Musk announced that the company cut 7 percent of its full-time employees to cut costs and increase profits. He revealed that although Tesla would make a second consecutive quarterly profit, it would be less than what the company gained in the last quarter. In recent years Tesla has greatly improved its work to try to fill hundreds of thousands of orders.
"Last year we grew 30 percent, more than we could maintain on the production line,"Musk said, adding that the company would retain its most critical employees and subcontractors.
Tesla must cut this while increasing the level of Model 3 production and making a lot of improvements in manufacturing engineering in the coming months, he said in a public letter to employees.
Greater volume and increase in manufacturing design is very important for Tesla to achieve economies of scale, needed to produce a Model 3 with a standard mileage (300 kilometers), a standard interior of $ 35,000 and still profitable.
SpaceX Musk also recently announced that he would release 10 percent of his workforce to fund other projects. After success with the two companies, Musk now seems determined to spend less. Last summer, Tesla announced it would launch up to nine percent of its workforce after Model 3 production began to move to the norm. At that time, the company had 46,000 employees, so additional layoffs seemed unavoidable given that Tesla's sales were still lower than other manufacturers.
"There are many companies that can offer better work life balance, because they are bigger and more mature or in an industry that is not so competitive, Muss said. "Efforts to build affordable clean energy products on a large scale certainly require extraordinary effort and cruel creativity, but success in our mission is important to ensure that the future is good, so we must do our best to achieve the cause."