Tesla to cut 9% of workforce, Model 3 production not affected by layoffs

Elon Musk said the company would continue to hire for critical roles and that finding additional production staff remained a priority. Above, a Model 3 sits on the showroom floor at a Tesla dealership in Chicago. (Getty Images/AFP)
Updated 14 June 2018
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Tesla to cut 9% of workforce, Model 3 production not affected by layoffs

  • The cuts concern salaried staff but not production workers and will not affect Model 3 output targets
  • Founded in 2003 by a group of engineers drawn to electric cars, Tesla went public in 2010 and began delivering the Model S sedan in 2012

NEW YORK: Electric carmaker Tesla Motors announced Tuesday it was cutting nine percent of its workforce to enhance profitability but said the move would not affect an ambitious production ramp-up of its Model 3 sedan.
The job cuts are part of a company-wide restructuring to address excess staff in some areas due to the company’s speedy growth, Tesla chief Elon Musk said in an email to employees.
The cuts concern salaried staff but not production workers and will not affect Model 3 output targets, said Musk, who characterized the downsizing as an acknowledgement of the need to focus more on costs.
“Given that Tesla has never made an annual profit in the almost 15 years since we have existed, profit is obviously not what motivates us,” Musk said in the message.
“What drives us is our mission to accelerate the world’s transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable,” Musk added.
“That is a valid and fair criticism of Tesla’s history to date.”
The layoff affects almost 4,000 workers, based on figures supplies by the company. Musk said last month that the company would conduct a “sort of reorganization” but did not discuss specifics.
Musk said Tuesday the company would continue to hire for critical roles and that finding additional production staff remained a priority.
Musk said on Twitter that the decision to cut jobs was “difficult but necessary.”
The Tesla chief has at times clashed with Wall Street analysts over an aggressive cash burn rate that has fed skepticism over whether the company can reach its goals after the company earlier missed several key benchmarks for the Model 3.
Just six weeks ago, Musk was in the doghouse with many Wall Street analysts after he abruptly cut off an earnings conference call because of “dry” and “bonehead” questions that dug into capital spending details.
But others on Wall Street and beyond view the charismatic Tesla chief as a visionary, sometimes comparing him to Apple co-founder Steve Jobs and others who have also disrupted industries.
The company’s stock is up about 15 percent since June 5, when Musk signaled that the company would likely meet a goal of producing 5,000 Model 3 sedans by the end of June.
Shares had also risen Monday after Musk said on Twitter the company’s updated Autopilot software coming in August would enable “full self-driving features.”
Shares of Tesla rose 3.3 percent in afternoon trading to $343.00
Founded in 2003 by a group of engineers drawn to electric cars, Tesla went public in 2010 and began delivering the Model S sedan in 2012.
However, the company’s first two major vehicles both sell for around $75,000 or more, whereas the Model 3 starts at $35,000 and had been billed as the first electric car aimed at the middle market.
Since that time, General Motors has also launched a model for this market, the Chevrolet Bolt.
GM chief Mary Barra announced Tuesday that the company planned to boost production of the Bolt to meet demand and reiterated plans to launch more than 20 new electric vehicles worldwide by 2023.


Malaysia reviews China infrastructure plans

Malaysia’s former PM Najib Razak (AFP)
Updated 18 June 2018
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Malaysia reviews China infrastructure plans

  • Malaysia's scandal-mired former PM Najib Razak signed a string of deals for Beijing-funded projects, including a major rail link and a deep-sea port.
  • New Prime Minister Mahathir Mohamad has announced a planned high-speed rail link between Kuala Lumpur and neighboring Singapore will not go ahead as he seeks to reduce the country’s huge national debt.

KUALA LUMPUR: Malaysia has been a loyal partner in China’s globe-spanning infrastructure drive, but its new government is to review Beijing-backed projects, threatening key links in the much-vaunted initiative.

Kuala Lumpur’s previous regime, led by scandal-mired Najib Razak, had warm ties with China, and signed a string of deals for Beijing-funded projects, including a major rail link and a deep-sea port.

But the long-ruling coalition was unexpectedly voted out last month by an electorate alienated by allegations of corruption and rising living costs.

Critics have said that many agreements lacked transparency, fueling suspicions they were struck in exchange for help to pay off debts from the financial scandal which ultimately helped bring down Najib’s regime.

The new government, led by political heavyweight Mahathir Mohammed, has pledged to review Chinese deals seen as dubious, calling into question Malaysia’s status as one of Beijing’s most cooperative partners in its infrastructure push.

China launched its initiative to revive ancient Silk Road trading routes with a global network of ports, roads and railways — dubbed “One Belt, One Road” —  in 2013.

Malaysia and Beijing ally Cambodia were seen as bright spots in Southeast Asia, with projects in other countries often facing problems, from land acquisition to drawn-out negotiations with governments.

“Malaysia under Najib moved quickly to approve and implement projects,” Murray Hiebert, a senior associate from think-tank the Center for Strategic and International Studies, told AFP.

Chinese foreign direct investment into Malaysia stood at just 0.8 percent of total net FDI inflows in 2008, but that figure had risen to 14.4 percent by 2016, according to a study from Singapore’s ISEAS-Yusof Ishak Institute.

However, Hiebert said it was “widely assumed” that Malaysia was striking quick deals with China in the hope of getting help to cover debts from sovereign wealth fund 1MDB.

Najib and his associates were accused of stealing huge sums of public money from the investment vehicle in a massive fraud. Public disgust at the allegations — denied by Najib and 1MDB — helped topple his government.

Malaysia’s first change of government in six decades has left Najib facing a potential jail term.

New Prime Minister Mahathir Mohamad has announced a planned high-speed rail link between Kuala Lumpur and neighboring Singapore will not go ahead as he seeks to reduce the country’s huge national debt.

The project was in its early stages and had not yet received any Chinese funding as part of “One Belt, One Road.” But Chinese companies were favorites to build part of the line, which would have constituted a link in a high-speed route from China’s Yunnan province to trading hub Singapore, along which Chinese goods could have been transported for export.

Work has already started in Malaysia on another line seen as part of that route, with Chinese funding — the $14-billion East Coast Rail Link, running from close to the Thai border to a port near Kuala Lumpur.

Mahathir has said that agreement is now being renegotiated.

Other Chinese-funded initiatives include a deep-sea port in Malacca, near important shipping routes, and an enormous industrial park.

It is not clear yet which projects will be amended but experts believe axing some will be positive.

Alex Holmes, Asia economist for Capital Economics, backed canceling some initiatives, citing “Malaysia’s weak fiscal position and that some of the projects are of dubious economic value.”

The Chinese foreign ministry did not respond to request for comment.

Decoder

What is the "One Belt, One Road" initiative?

The “One Belt, One Road” initiative, started in 2013, has come to define the economic agenda of President Xi Jinping. It aims to revive ancient Silk Road trading routes with a network of ports, roads and railways.