Tesla cuts jobs on road to make affordable electric vehicles

Tesla will cut seven per cent of its workforce as it tries to lower prices and break out of the niche-car market to produce an electric vehicle that more people can afford.

Tesla’s cheapest model is the US$44,000 Model 3, and it needs to broaden its customer base to survive. “Looking ahead at our mission of accelerating the advent of sustainable transport and energy, which is important for all life on Earth, we face an extremely difficult challenge: making our cars, batteries and solar products cost-competitive with fossil fuels,” CEO Elon Musk said in a letter to staff. “While we have made great progress, our products are still too expensive for most people.”

Tesla had boosted its payroll significantly to meet output goals, but then cut its staff by nine per cent in June. It delivered more than 245,000 electric cars and SUVs last year, nearly as many as all previous years combined. But it still fell far short of its goal of manufacturing 500,000 vehicles for the year.

Musk said in October that Tesla Inc., based in Palo Alto, Calif., had 45,000 staff. The seven-per-cent cut would mean about 3,150 lost jobs.

Tesla posted a US$311-million quarterly profit in October, only its third profitable quarter in eight years as a public company.

Musk said the profit was driven by its ability to sell higher priced vehicles in North America.

While initial numbers indicate another profitable quarter ahead, Musk said it appears to be a smaller. Shares fell 11 per cent Friday. It has been Tesla’s long-held goal to get a cheaper, mid-range Tesla Model 3 on the road. “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,” Musk said.