The figure represents about 7 percent of the company’s workforce, and the announcement of the firings is somewhat counter-intuitive.
For the first time in 15 years, Tesla made a profit in the last quarter of 2018. It was a small, 4 percent profit, Musk says, but the company’s first meaningful one in 15 years.
The carmaker also sold “nearly as many cars” as in all the previous years combined, and the Model 3 climbed to the top of sales charts in the premium segment of the U.S. market. Why then, in such great times, the need to cut personnel?
Because Tesla needs to sell more and at the same time cheaper cars, so that all mankind could benefit from the “advent of sustainable transport and energy, which is important for all life on Earth,” Musk says.
In essence, Musk is announcing a shift from selling higher-priced cars to selling medium-priced volumes, even though until now one did not seem to exclude the other in Tesla’s case.
The company will begin deliveries of the mid-range, lower-price Model 3 in all markets as of May, meaning less cash coming in. It will also have to somehow offset the scrapping by the end of the year of the U.S. tax credit for electric cars.
To support this new plan, Tesla plans to increase the production rate for the Model 3, especially the mid-range variant, but do it with less personnel.
"As a result of the above, we unfortunately have no choice but to reduce full-time employee headcount by approximately 7% (we grew by 30% last year, which is more than we can support) and retain only the most critical temps and contractors," Musk says in his email.
“To those departing, thank you for everything you have done to advance our mission. I am deeply grateful for your contributions to Tesla. We would not be where we are today without you,”
The entire letter, as sent to Tesla employees, can be read in the Press Release section below.