As Tesla made a shocking announcement conducting a second round of layoffs to cut their costs, reliable sources revealed the production and delivery department greatly suffered from the loss.
According to two laid-off workers who chose not to drop their name, the giant automaker laid off 50% of its employees in the said division. The worse part, Tesla is having a difficult time meeting its production goals due to the lesser workforce.
The Layoffs
From an original team of 230 employees working to deliver electric vehicles in the United States, Tesla cut down its workforce down to 150 employees in their Las Vegas facility.
The said facility has been responsible for producing thousands of Model 3 for both Canadian and US buyers. According to experts, the resulting layoff may push the company’s already slowing production to slow further.
According to Tesla CEO Elon Musk, they have an insane high-demand for Tesla Model 3
Aside from meeting the target sales deadline, the business analysts said the recent layoff might spark the investors’ woes about the company’s longevity.
Aside from that, they worry if the consumers can still afford to buy Tesla Model 3s’ high price after the massive tax break expired last year. Consumers might be in a tighter budget this 2019 compared to the year prior.
Emerging Markets
Despite the challenges Tesla faces at the start of the year, Musk says they’re confident the company can still meet its production and sales goals.
According to the representatives, Tesla will focus this quarter in delivering its cars to emerging markets in China and Europe. Meanwhile, they assured they could provide and supply enough cars to all their customers worldwide.
Tesla’s primary goal is to make Model 3 available in the market in the second half of 2019.
They also add how Tesla focuses all its effort in providing Model 3 cars in the United States so that their customers can take advantage of the $7,500 tax credit cut before the year ends.
The production of Model 3 also plays a vital role in pulling up Tesla’s long-term profitability. Tesla is confident their latest trademark electric vehicle will click to the public as they plan on to release profit report in every quarter.
The Doubts
Even before the news of layoffs emerged, the investors already expressed their woes when they questioned whether or not the high in-demand for Model 3 was true or not. According to Brian Johnson, an analyst at Barclays said the financial community is now focusing on the demand for Tesla’s vehicles especially the Model 3.
The investors want to get a specific number of reservation lists to determine how in-demand Model 3 is.
They are interested in how Tesla will pull their sales up and increase their cash flow and revenue after cutting back their costs and workforce. Meanwhile, two former employees of Tesla reveal the low 2018 sales the company’s reservation list decreased as lesser North American buyers hesitate to pay over $40,000 for the said vehicle.
The Demand
Elon Musk, on the other hand, assures the investors by stating there is a reasonable demand for Model 3. Since its launching in 2017, he claimed over 500,000 buyers around the world had made reservations as well as putting down deposits for the said car. The surge in demand helped Tesla’s shares to increase up to 15% for the next six weeks.
Tesla delivered more than 145,610 cars in 2018. However, the investors noticed the prices are higher than Musk’ promise of $35,000 price tag. Musk addressed the issue last week by stating they’re working on a $35,000 version of Model 3 and it’s scheduled to release in six months. Despite Musk’s promise, the public still expresses their concern as Tesla’s price tag is still at $42,900 despite the two recent significant tax cuts this year.
