The company, which has struggled to achieve long-term profitability and keep a tight lid on expenses, also said it expects fourth-quarter profit to be lower than the preceding quarter. Chief Executive Officer Elon Musk said the need for lower-priced versions of Model 3 will become even greater from July, when the U.S. tax credit again drops in half, adding $1,875 to the car's price tag, and again at the end of the year when it goes away entirely. The phase-out of the electric vehicle tax break confronts Tesla with the choice of raising prices at the risk of losing customers or slashing costs by thousands of dollars per vehicle, a herculean task for an automaker.
Elon Musk told employees about the cuts in a letter posted online.
The company has long struggled with cash burn and Chief Executive Officer Elon Musk has been under intense pressure to stabilize production of the Model 3, seen critical for easing a cash crunch and achieving long-term profitability. "I want to make sure that you know all the facts and figures and understand that the road ahead is very difficult," Musk said in an email to employees that was published on the company's blog. This is Tesla's second job cut in seven months and comes just days after it cut U.S. prices for all vehicles and fell short on quarterly deliveries of its mass-market Model 3 sedan.
Electric-vehicle maker Tesla will recall over 14,000 Model S cars in China as part of the global automotive sector's effort to replace potentially dangerous airbags made by Takata, China's market regulator announced on Friday. Takata went bust in 2017 after defective airbags were blamed for a number of deaths. The Chinese regulator said the passenger-side airbags of the affected Model S cars were equipped with a Takata-made device containing an ammonium nitrate propellant.