Why? Because leaner is always better.
In a conference call, Elon Musk has revealed that Tesla will be making some serious moves to ‘advance their mission’ and go about “accelerating the advent of sustainable transport and energy, which is important for all life on Earth.” Usual Musk garbage aside, the CEO said that in order to ensure that the company remains profitable and efficient, they’ll be axing a sizeable number of their workforce and cutting the very-successful referral program, as part of measures to keep costs under control.
2018 was described by Musk as one of the most difficult yet rewarding years for the company yet. They managed to achieve the targeted 5,000/week Model 3 production figure, a target chased with such fury that Tesla was at times just week away from bankruptcy due to the expenses incurred in order to hit that target.
The fruit of that labour perhaps came in the third-quarter of 2018 when, for the first time in many years, Tesla Inc. actually returned a profit. A 4% profit might not seem like much but, for a firm that’s been losing money hand-over-fist for many years (with its burn rates even featuring here), it’s a small win worth counting.
However, a major issue with Tesla this year is the cutback of EV grants that go towards the purchase of a new EV. As Tesla has surpassed the 200,000 cap that the US Government placed on those grants, price reductions have dropped from US$7500 to US$3750, with a further drop to US$1875 forecast for July, before being phased out completely by 2020. As such, Tesla must continue its work in reducing the overheads and “making progress towards lower-priced variants of the Model 3,” as Musk said.
And so in one fell swoop, in addition to cutting the Tesla workforce by 7% (with “only the most critical temps & contractors” retained), the company is also axing its referral program come February 1st. That comes as Musk says it adds “too much cost to the cars, especially Model 3.” This will allow the company to keep making small cuts to the cost to ensure strong competition in the marketplace, despite the rollback of EV grants.
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