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With subsidies gone, Tesla sacks workers in US

Reuters
Tesla Inc more than halved the division that delivers its electric vehicles to North American customers, two of the laid-off workers said.
Reuters

When Tesla Inc announced last month a second round of job cuts to rein in costs, one crucial department was particularly badly hit. The automaker more than halved the division that delivers its electric vehicles to North American customers, two of the laid-off workers said.

Some 150 employees out of a team of about 230 were let go in January at the Las Vegas facility that gets tens of thousands of Model 3s into the hands of US and Canadian buyers, they said, in a sign the company expected the pace of deliveries to significantly slow in the near term. The cuts, which have not been previously reported, could fuel investor worries that demand for the Model 3 in the United States has tailed off after a large tax break for consumers expired last year.

This has made the car too expensive for most consumers.

Tesla has said its focus this quarter is on supplying cars to customers waiting in China and Europe.

“There are not enough deliveries,” one of the former employees said. “You don’t need a team because there are not that many cars coming through.”

Delivery of the Model 3 was the company’s key priority in the latter half of 2018, as Tesla tried to supply all buyers wanting the full benefit of the US$7,500 US tax credit before it was cut in half at year’s end.

The Model 3 is crucial to Tesla’s plans for long-term profitability.

The company aims to post a profit in each quarter this year, based on the expectation that it will sell more Model 3s and continue to cut costs.

Tesla declined to comment on the job reductions in the delivery team. The company still has an undisclosed number of delivery personnel attached to other locations.

Even before the paring back of the delivery team, investors questioned the level of demand for the Model 3 remaining after Tesla’s all-out push to supply buyers ahead of the tax credit cut.

“Given the need for revenue to cover costs and generate cash, the financial community should be focused on the level of demand for Tesla vehicles — in particular the Model 3,” wrote Barclays analyst Brian Johnson in January.

The two former delivery workers said the aggressive 2018 sales push has left Tesla’s reservations list plucked clean of North American buyers who are willing to pay the current prices of more than US$40,000 to get their hands on a Model 3.


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