In an email sent to Tesla employees that was later published on its website, CEO Elon Musk announced that approximately 7% of Tesla's full-time employees will be let go. That's around 3150 workers. The cuts will hopefully help Tesla's quest to increase Model 3 production and finally introduce the $35,000 Standard Range variant that has been talked about since the Model 3's inception. In the email, Musk states "we unfortunately have no choice but to reduce full-time employee headcount," adding that "there isn't any other way" to achieve Tesla's goals. The letter does not specify which departments will see the most cuts, only mentioning that "the most critical temps and contractors" will be retained.
The current least-expensive Model 3, the Mid Range battery version, starts at $45,200 before any federal tax credits or incentives. Speaking of that federal tax credit, it was reduced from $7500 to $3750 at the beginning of January, and for all Tesla deliveries from July 1 onward, it will drop further to just $1875, and then go away completely at the end of 2019. Musk says this makes the need for lower-priced Model 3s "even greater."
In addition to the diminishing federal tax credit, Tesla this week also canceled its referral program, which allowed current Tesla owners to gift free charging at Supercharger stations to friends that they recommend a Tesla to. In previous iterations of the referral program, owners could also gain rewards like trips to new model unveilings, Powerwall home batteries, and even free Teslas.
Musk peppered good news throughout the letter, pointing out that 2018 was Tesla's most successful year and the Model 3 was 2018's best-selling luxury car. In fact, he says that Tesla's 2018 growth was "more than we can support;" the company grew by 30% in the past year. At the end of the email, Musk mentions that Tesla has the most exciting upcoming products of any "consumer product company," saying that "full self-driving," the Semi truck, the new Roadster, a pickup, a Model Y crossover, and more are all on the way. We think Tesla needs to focus on getting that elusive $35,000 Model 3 out, first.
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