Tesla plans 7% staff cut as CEO Elon Musk says company must ‘work harder’

Tesla broke ground earlier this month for a factory in Shanghai, its first outside the US, to produce the Model 3 there. (AP)
Updated 18 January 2019
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Tesla plans 7% staff cut as CEO Elon Musk says company must ‘work harder’

  • Tesla delivered over 245,000 electric cars and SUVs last year, nearly as many as all previous years combined
  • But its 2018 production fell far short of a goal set nearly three years ago of manufacturing 500,000 vehicles for the year

Saying the road ahead was “very difficult,” Tesla’s CEO Elon Musk said Friday that the company would be cutting its staff by about 7 percent.
The electric car and solar panel maker notified its employees about the staff cuts and other plans in an email posted on Tesla Inc.’s website.
Musk said Tesla hopes to post a “tiny profit” in the current quarter but a 30 percent expansion in its workforce last year was more than it can support.
Tesla’s shares tumbled earlier this month after it cut vehicle prices by $2,000 and announced fourth-quarter sales figures that fell short of Wall Street estimates.
“Our products are too expensive for most people,” Musk said in the memo to Tesla staff, saying the company has to “work harder.”
“Tesla has only been producing cars for about a decade and we’re up against massive, entrenched competitors,” he said.
Musk said in a tweet in October that Tesla, based on Palo Alto, California, had 45,000 employees. A 7 percent cut would involve laying off about 3,150 people.
“We unfortunately have no choice but to reduce full-time employee headcount by approximately 7 percent ... and retain only the most critical temps and contractors,” he said.
The company says it delivered over 245,000 electric cars and SUVs last year, nearly as many as all previous years combined. But its 2018 production fell far short of a goal set nearly three years ago of manufacturing 500,000 vehicles for the year. That goal was announced in May of 2016 based on advance orders for its mid-range Model 3, which Musk said sells for $44,000.
Musk said Tesla plans to ramp up production of the Model 3, “as we need to reach more customers who can afford our vehicles.”
“Attempting to build affordable clean energy products at scale necessarily requires extreme effort and relentless creativity,” he said in the memo, “but succeeding in our mission is essential to ensure that the future is good, so we must do everything we can to advance the cause.”
Tesla broke ground earlier this month for a factory in Shanghai, its first outside the US. Musk said it plans to begin production there of the Model 3 and a planned crossover by the year’s end.
Tesla and other global automakers including General Motors Co., Volkswagen and Nissan Motor Corp. are pouring billions of dollars into manufacturing electric vehicles in China.


Honda’s impending closure of Britain plant not Brexit-related: president

Updated 59 min 38 sec ago
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Honda’s impending closure of Britain plant not Brexit-related: president

TOKYO: Honda announced Tuesday it would shut a major plant in Britain, putting 3,500 jobs at risk as the auto manufacturer became the latest Japanese firm to downsize operations as Brexit looms.
The factory in Swindon, southwest England, is Honda’s only EU plant and has produced the manufacturer’s “Civic” model for more than 24 years, with 150,000 units rolling off the line annually.
The plant will shut in 2021, Honda announced, “at the end of the current model’s production lifecycle.”
The decision “has not been taken lightly and we deeply regret how unsettling today’s announcement will be for our people,” said Katsushi Inoue, chief officer for European regional operations, in a statement.
The firm blamed “unprecedented changes in the global automotive industry” for the decision but it comes amid investment uncertainty in Britain ahead of the country’s exit from the EU.
Speaking to reporters in Tokyo, Honda president Takahiro Hachigo said: “I’d like you to understand this is not related to Brexit.”
He said it was “very regrettable” to have to close the plant but said it was the “best choice” given the need to reduce production capacity and reform its global facilities.
The firm also announced it would stop manufacturing the Civic model in Turkey in 2021.
Honda joins fellow car giant Nissan as well as Japanese firms Sony, Panasonic and Hitachi in scaling back operations in Britain ahead of the country’s departure from the European Union.
Analysts say that while Brexit was almost certainly a factor for Honda, other reasons were likely to have played a part, including a massive EU-Japan free-trade agreement recently signed and the wider struggles of the car industry.
“Honda seems to have been preparing for this for a long time. Then Brexit happened, which might have pushed the company to make the decision now,” Seiji Sugiura, analyst at Tokai Tokyo Research Institute, said.
Speaking ahead of the formal decision, local finance worker Sue Davis, 49, said the move would be “devastating” for the area.
“I think Swindon’s finished without Honda. My ex-husband works there, has done for 20 years. He’s going to be without a job, so I just think it’s really, really bad news.”
Local MP Justin Tomlinson tweeted ahead of Tuesday’s announcement that the decision had been made “based on global trends and not Brexit as all European market production will consolidate in Japan in 2021.”
Earlier this month, Nissan axed production of the X-Trail SUV in the Brexit-backing northeast city of Sunderland, despite government assurances over the consequences from the EU exit.
Nissan Europe chairman Gianluca de Ficchy said then that the cuts were made “for business reasons” but admitted that “the continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future.”
Auto giant Toyota also warned in February there would be no way to avoid a negative impact in the event of Britain crashing out of the EU without a deal.
Toyota executive vice president Shigeki Tomoyama noted that the firm’s assembly plant in Burnaston, central England, which produces 600 vehicles per day, operates under the “just-in-time” system that relies on a smooth flow of components from the EU.
“We will have to halt the plant if the car parts are not brought in” from the continent, Tomoyama warned.
Japanese electronics giants Sony and Panasonic, as well as several banks, have moved some of their operations out of Britain since the 2016 referendum that set Brexit in motion.
Prime Minister Shinzo Abe pleaded against a no-deal Brexit in recent talks with his British and German counterparts, telling Theresa May last month: “We truly hope that a no-deal Brexit will be avoided and in fact this is the... wish of the whole world.”
And Japanese officials have reportedly become frustrated with their British counterparts as they negotiate a potential post-Brexit trade deal.
Britain is due to leave the EU on March 29, but its parliament last month rejected a draft divorce deal May negotiated with the bloc, prompting fears the country could crash out without an agreement next month.