Tesla will reduce the number of full-time employees worldwide by 7%

Tesla's executive director, Ilon Mask, wrote an expanded narrative letter to the company's employees explaining the reasons and planned actions on personnel matters.

Also, the company intends to retain only the most important temporary employees and contractors.

On the morning of January 18, 2019, the following email was sent to all Tesla employees.

As we all saw for ourselves, last year was the most difficult in the history of Tesla.
However, thanks to your efforts, the year 2018 was also the most successful year in Tesla history: in the last quarter of 2018 alone, we shipped almost as many cars as in the whole of 2017, and as many cars as in the whole last year were delivered. all together the previous years of Tesla!

In 2018, the Model 3 also became the best-selling premium car in the United States. This is indeed a very remarkable fact that refuted the opinions of those who recently considered it impossible.

Looking ahead, in our mission to accelerate the introduction of electric transport and the use of renewable energy, which is very important for all life on Earth, we are faced with an extremely difficult task: to make our developments - cars, batteries and solar panels competitive in price against products using antediluvian ( fossil fuel.

Although we have made great progress with you, our products are still too expensive for most customers. Tesla has been producing cars for only about ten years, and we alone stand against huge, ingrained competitors. To improve efficiency, Tesla must work much harder than other manufacturers in order to survive, creating affordable and well supported products.

In the third quarter of 2018, we were able to get 4% profit. Despite the small size of most standards, I would still consider this figure as our first significant profit in the 15 years since Tesla was created. However, this is in part the result of selling mostly more expensive Model 3 options in North America. Preliminary, unofficial results of 4Q2018 show that we again made GAAP profit, but less than in 3Q2018. In the fourth quarter, as in the third quarter, shipping more expensive options for Model 3 (this time to Europe and Asia), I hope, will allow us, with great difficulty, effort and some luck, but still get a tiny profit.

Nevertheless, starting around May 2019, we will need to ship the more affordable version of the Mid Range Model 3 to all markets, as we need to attract more customers who can afford our cars. Moreover, we need to continue to modernize the assembly process and reduce the cost of producing more affordable Model 3 options.

At the moment, our most affordable offer is the mid-range Model 3 version (264 miles \ 424 km) with premium sound filling and an interior cost of 44 thousand dollars. The need to supply cheaper versions of the Model 3 is even greater since July 1, 2018, when tax concessions for the purchase of electric cars in the US are halved, making our car $ 1875 more expensive, and by the end of the year, the opportunity to get even this benefit will disappear - for their cancellation.

Sorry, please, for all these numbers above, but I want to make sure that you know all these facts and data, and you also understand that the way forward will be very difficult.

This is all not new to us - we have always faced serious problems - but this is the harsh reality that we always face to face. There are many companies in the world that can offer a better balance between work and personal life, because they are larger and more developed, or belong to industries in which there are no competitors that are so insatiable in their competitiveness.

Attempting to create affordable, environmentally friendly energy products on an industrial scale necessarily requires extraordinary efforts and constant creativity, but success in our complex mission is crucial to ensuring a good future, so we must do everything possible to move our business forward ...

As a result of the above, we, unfortunately, have no choice but to reduce the number of full-time staff by about 7% (last year we grew by 30%, and now there are more of us than we can afford ) and retain only the most critical temporary staff and contractors.

Tesla should make these cuts as long as it is possible to further increase Model 3 production and make improvements in production and assembly technology in the coming months.

The increase in production and improvement of production technology are crucial for Tesla, in order to achieve further savings due to the growth in sales required for further production standard range Model 3 (220 miles \ 354 km), standard interior Model 3 for 35 thousand dollars, but remain a viable company.

There is no other way.

To those with whom we part, thanks for all that you have done to advance our mission.
I am deeply grateful for your contribution to Tesla. We would not be where we are now without you.

As for the remaining ones, although there are still many challenges ahead, I believe that we have the most exciting road map among all producers of consumer goods in the world.
A full-fledged autopilot, Model Y, Semi, Truck and Rodster from both the vehicle and Powerwall / pack and Solar Roof from the energy products side is just the beginning.

It is a great honor for me to work with you.

Thanks for all,
Ilon