Tesla Sinks After Announcing 7% Job Cuts

tesla factory

Tesla Inc (NASDAQ: TSLA)

Tesla Inc. shares were down $19.30, or 5.56% to $328.01 in pre-market hours on Friday after the electric-car maker said it plans to trim its workforce by about 7 percent. The decision is expected to affect more than 3,000 employees, out of its 45,000 workforce.

In a blogpost addressed Tesla employees, Musk said, “Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months. Attempting to build affordable clean energy products at scale necessarily requires extreme effort and relentless creativity, 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 also warned that fiscal 2018 fourth quarter earnings are likely to be lower compared with its third quarter. Chief Executive Elon Musk said the company faces a very difficult road ahead in trying to make more people afford its electric vehicles.

The Palo Alto, California-based company said it unaudited results indicate it will post a GAAP profit for its fourth quarter ended December, 31, 2018. It however warned that figure will be lower than the $312 million it reported in the previous three-month period. Tesla also announced plans to increase Model 3 deliveries in all markets before July 1 when U.S. tax credits drop by half, making the car $1,875 more expensive.

“Starting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles,” Mr. Musk said.

As of 10:00 a.m. in New York, shares of Tesla were changing hands at $317.41 after declining $29.90, or 8.61% on the Nasdaq stock market. The stock has rallied more than 23% over the past three months and currently has a market value of approximately $56 billion.

Tesla, Inc. Profile

Tesla, Inc. engages in the design, development, manufacture, and sale of fully electric vehicles, energy generation and storage systems. It also provides vehicle service centers, supercharger station, and self-driving capability. The firm operates through Automotive, and Energy Generation and Storage segments. The Automotive segment includes the design, development, manufacture and sale of electric vehicles.

The Energy Generation and Storage segment includes the design, manufacture, installation, sale, and lease of stationary energy storage products and solar energy systems, and sale of electricity generated by its solar energy systems to customers. The company was founded by Jeffrey B. Straubel, Elon Reeve Musk, Martin Eberhard, and Marc Tarpenning on July 1, 2003 and is headquartered in Palo Alto, CA. – CNN Money