Elon Musk’s Tesla to slash more than 7000 jobs

In a bid for profitability, electric car maker Tesla will be cutting seven percent of its workforce — more than 7,000 people. The layoffs were announced …

In a bid for profitability, electric car maker Tesla will be cutting seven percent of its workforce — more than 7,000 people.

The layoffs were announced by CEO Elon Musk in an email to staff, where he also outlined the company’s financial challenges.

“While we have made great progress, our products are still too expensive for most people. Tesla has only been producing cars for about a decade and we’re up against massive, entrenched competitors. The net effect is that Tesla must work much harder than other manufacturers to survive while building affordable, sustainable products,” he wrote.

He further added:

“There are many companies that can offer a better work-life balance, because they are larger and more mature or in industries that are not so voraciously competitive. 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.”

Some 3,000 jobs had been terminated in the middle of last year as part of a restructuring exercise.

Musk ended last year in the headlines for smoking marijuana while smoking weed. The incident led to NASA calling for a safety review not only at Tesla, but also at its aircraft competitor, Boeing.

Tesla to add ‘sentry mode’ to keep an eye on your car while it is parked using its self driving camera …

CEO Elon Musk said the company will roll out ‘Sentry Mode’ that should give users the ability to see and record any activity that happens when they …

Tesla wants to let nervous car owners check on their vehicle while they’re away.

CEO Elon Musk said the company will roll out ‘Sentry Mode’ that should give users the ability to see and record any activity that happens when they step away from their Tesla.

It’s unclear when the feature will launch, however.

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CEO Elon Musk said the company will roll out 'Sentry Mode' that should give users the ability to see and record any activity that happens when they step away from their Tesla

CEO Elon Musk said the company will roll out 'Sentry Mode' that should give users the ability to see and record any activity that happens when they step away from their Tesla

CEO Elon Musk said the company will roll out ‘Sentry Mode’ that should give users the ability to see and record any activity that happens when they step away from their Tesla

‘Sentry Mode’ will be available for all cars with Enhanced Autopilot, according to Musk.

Autopilot, or Enhanced Autopilot as it was renamed to in 2016, is the software that allows Tesla vehicles to drive semi-autonomously.

Musk didn’t elaborate on how Sentry Mode would work, but TechCrunch noted that it could enable the dashcam to remain on when the driver is away.

It could also be activated if the car senses it’s been hit.

Musk’s post was prompted by a tweet from a Tesla owner who said his car had been hit.

‘Found this monster dent this morning, right in front of the rear facing cameras,’ Twitter user Andy Sutton wrote.

It's unclear when Sentry mode will launch, but it could enable users to activate their vehicle's 360-degree front-facing camera while they've stepped away to record any possible accidents

It's unclear when Sentry mode will launch, but it could enable users to activate their vehicle's 360-degree front-facing camera while they've stepped away to record any possible accidents

It’s unclear when Sentry mode will launch, but it could enable users to activate their vehicle’s 360-degree front-facing camera while they’ve stepped away to record any possible accidents

‘Really wish there was a 360 dash cam feature while parked.’

Sentry mode would take advantage of a software update, released last October for cars with Hardware 2.5 or later, which allows users to record 360-degree footage with their vehicle’s front-facing camera.

The footage is recorded and stored on a USB flash drive that the user has to provide.

It comes as Musk has also talked about introducing ‘dog mode’ for the Model 3.

‘Dog mode’ would help canine owners when they have to step away from their vehicle.

Twitter user Josh Atchley asked Musk if he could implement a ‘dog mode’ feature ‘where the music plays and the AC is on, with a display on screen saying “I’m fine my owner will be right back.”‘

To this, Musk simply replied: ‘Yes.’

By including a message on the Model 3’s main screen, it would notify people that the dog or child is OK.

Furthermore, another user suggested including the interior temperature on the screen as well – an idea that Musk seemed to like, replying in a tweet, ‘Exactly.’

As with most of Musk’s ideas born on Twitter, there’s no guarantee this feature will ever launch in subsequent Tesla software updates.

WHAT IS TESLA’S MODEL 3 ELECTRIC CAR?

Tesla’s Model 3 is the company’s first lower-cost, high-volume car.

The electric sedan is crucial to Tesla’s goal of becoming a profitable, mainstream automaker.

The five-seat sedan will travel 215 miles (133 kilometres) on a single charge.

It will be sporty, accelerating from zero to 60mph (0-100kph) in under six seconds.

Billionaire tech mogul and Tesla chief Elon Musk released new details about the long-awaited, $35,000 Model 3 sedan (pictured) in a series of tweets late Sunday

Billionaire tech mogul and Tesla chief Elon Musk released new details about the long-awaited, $35,000 Model 3 sedan (pictured) in a series of tweets late Sunday

The Model 3 is Tesla’s first lower-cost, high-volume car. The first models of the $35,000 (£27,000) electric vehicle began production in July 2017

The car has no traditional dashboard, but instead a computer monitor in the center of the car which shows details about the car and its route.

It will be controlled via a touchscreen and each side of the steering wheel will have a single scroll button.

The first models of the $35,000 (£27,000) electric vehicle began production in July 2017.

But the company has suffered production woes ever since, frequently missing the targets it set itself when the vehicle was announced in 2016.

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Tesla’s mass layoffs and reduced car production have Wall Street ‘waking up from the dream’

Elon Musk’s electric-auto giant Tesla said Wednesday it has curbed production for some of its most expensive vehicles after its second mass layoff in …

Drew Harwell

National technology reporter covering artificial intelligence

January 23 at 5:37 PM

Elon Musk’s electric-auto giant Tesla said Wednesday it has curbed production for some of its most expensive vehicles after its second mass layoff in seven months, fueling concern over the company’s ability to survive without making as many of the top-dollar cars that helped it become a household name.

Tesla said it has trimmed the production hours for its Model S sedan and Model X SUV at its sole car-making factory, a rare pullback for a company that became one of America’s most valuable automakers due partly to its rapid manufacturing ramp-up of battery-powered cars. Tesla stock fell roughly 4 percent Wednesday.

The drawdown will help shift Tesla’s production away from the more profitable luxury cars that helped it upend the auto industry and further toward its cheaper Model 3, which the company has long promised would be key to attracting a mass-market audience.

But Tesla has struggled for months to handle production, cost and delivery issues surrounding the Model 3, and Musk has said the company can’t sell the car at its long-promised price of $35,000 while remaining profitable. Wall Street analysts have said the company has not yet proven it can lose out on those premium sales and still function in a competitive market.

[Inside the Tesla Factory: Burning cash, and trying not to burn out]

“While the strategy … to bring cost down for the low end had good intentions, we believe Tesla underestimated the cost curves and manufacturing side of the equation,” RBC Capital Markets analyst Joseph Spak wrote in a note to clients this week titled, “Waking up from the dream.” Thirty-four months after Tesla promised a $35,000 Model 3, “the car still does not exist.”

The company last week laid off roughly 7 percent of its full-time employees and all but its “most critical (temporary workers) and contractors,” Musk said in a company email. A Tesla official said the layoffs were across the organization, likely affecting sales and production staff.

Those thousands of job cuts come only seven months after Tesla laid off another 9 percent of its workforce. Factory employees are critical for the company, where an overreliance on car-making robots last year sparked the costly delays of what Musk called Tesla’s “manufacturing hell.” “Humans are underrated,” he tweeted last spring.

[Tesla announces plan to cut 7 percent of its workforce to aid Model 3 production]

Musk has said the layoffs are critical to helping the company save money as it shifts away from selling the pricier, more profitable cars that have helped it stay afloat. Musk tweeted earlier this month that the company would stop selling the cheapest versions of the Model S and X, effectively setting the base prices for both models at more than $90,000 and helping the company differentiate the upscale cars from the cheaper, lower-battery Model 3.

The cheapest Model 3 today starts at around $45,000, about $10,000 more than the typical new car sold in the United States. And the company faces a growing challenge in making affordable electric cars at a time when larger automakers such as General Motors are accelerating production on electric competitors that could rival Tesla’s in price, size and style.

The company said in a statement Wednesday the drawdown was due to efficiency improvements on its factory line and “would give us the flexibility to increase our production capacity in the future as needed.”

[Tesla’s Numbers Come With Some Reservations]

Tesla earned a record quarterly profit last year, but Musk warned this month that its most recent quarter would “with great difficulty, effort and some luck” likely only show “a tiny profit.” The company will offer more detail when it reveals its newest quarterly financial report next week, a spokesman said.

“Everything we’re seeing with Tesla’s behavior in the last month suggests they don’t want to build their future on high-end cars,” said Gene Munster, managing partner at the investment firm Loup Ventures. “The real opportunity is to hit the sweet spot of the curve, at $35,000, and they’re a long way away from that today.”‘‘

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Elon Musk says Tesla will roll out a new ‘Sentry Mode’ for enhanced security

As for other features in the pipeline, Elon Musk recently took to Twitter and revealed that a new feature will likely allow users to record 360 degree …

Despite all of the negativity that can sometimes shroud Tesla, there’s no denying that the company revolutionized the auto industry in a relatively short period of time. Not only did Tesla prove that there was a market for electric vehicles, the success it enjoyed with the Model S ultimately spurred a number of traditional automakers to start developing their own electric vehicles. Without the Model S, for example, it’s fair to say that there would be no Porsche Taycan.

One of the more prominent innovations introduced by Tesla involves software improvements. Because so much of the Tesla experience hinges on software, the company is able to improve the overall driving experience by rolling out brand new features via over-the-air software updates. The most obvious example, of course, is when Tesla in late 2015 rolled out an update that introduced Autopilot to the world.

Since then, Tesla has used over the air software updates to introduce any number of new features and performance enhancements. As a recent example, Tesla not too long ago rolled out a software update with a Dashcam feature that allows users to record and store video via their car’s front-facing camera.

Tesla Sentry Mode coming soon for all cars with Enhanced Autopilot https://t.co/x2buQWiABX

— Elon Musk (@elonmusk) January 22, 2019

As for other features in the pipeline, Elon Musk recently took to Twitter and revealed that a new feature will likely allow users to record 360 degree video in the event of an alarm or serious incident. Responding to a user complaint about a dent they noticed on their car, Musk said that Tesla “Sentry Mode” is in the works and will be coming soon. Musk later clarified that the feature will be available for all cars with Autopilot 2 hardware.

Image Source: Ena/AP/REX/Shutterstock
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Tesla Stock Downgraded: What You Need to Know

The cut comes just days before Tesla is due to report Q4 earnings, which CEO Elon Musk has predicted will be profitable, but “less” so than the $312 …

Every day, Wall Street analysts upgrade some stocks, downgrade others, and “initiate coverage” on a few more. But do these analysts even know what they’re talking about? Today, we’re taking one high-profile Wall Street pick and putting it under the microscope…

After slipping below $300 earlier this week on worries about Tesla‘s (NASDAQ:TSLA) decision to cut car prices by $2,000 and lay off 7% of its workers to further reduce costs, shares of the electric-auto maker were under pressure again this morning, falling more than 2% in pre-noon trading.

You can thank RBC Capital for that.

Tesla Model 3

Do Tesla’s cost-cutting moves foreshadow weak sales for the Model 3 — or are they laying the groundwork for stronger profits to come? Image source: Tesla.

Downgrading Tesla

This morning, analysts at Canadian investment bank RBC announced they are cutting Tesla stock from sector perform to underperform and dropping their target price to $245, as described in a write-up on StreetInsider.com (subscription required).

The cut comes just days before Tesla is due to report Q4 earnings, which CEO Elon Musk has predicted will be profitable, but “less” so than the $312 million earnings quarter that Tesla reported three months ago. (How much less? Fool.com contributor Daniel Sparks is predicting a profit of between $0.80 and $1.50 per share, versus Q3’s $1.75 in GAAP per-share earnings.)

For the record, that prediction doesn’t faze RBC overmuch. To the contrary, RBC argues that Tesla getting more “tactful with messaging” is in fact “a long-term positive” that will temper expectations (and make it easier for the company to beat expectations, I might add). On the other hand, the fact that Tesla feels the need to lower its own bar suggests we’re now seeing “downward pressure to growth expectations — which in our view are too high.”

High hopes, but are they too high?

Why might RBC worry that expectations for Tesla are too high? Let’s run down the list.

In recent years, Musk has publicly predicted there will be demand for anywhere from 500,000 to 700,000 Model 3 sedans per year — demand that Tesla will be able to supply. RBC, on the other hand, says “a reasonable max Model 3 production range for Tesla [is] 260[k]-312k” units. As the analyst explains, “[T]he $2k price cut and talk about having to lower cost further as federal tax incentives subside confirms our view that the bulk of demand is at a lower price point” than the near-$60,000 average price of Model 3s sold last year “that Tesla can’t access yet profitably.”

Accordingly, RBC is predicting Tesla will max out production at the 312,000-unit level.

A consensus is forming

Nor is RBC the only analyst sounding this warning. Reuters is quoting Greenlight Capital founder David Einhorn today, warning that analysts who last year mostly worried that Tesla might suffer a “shortage of supply” are now starting to worry that a “shortage of demand” will be the company’s bigger problem.

Indeed, analysts at Needham & Co., who were already bearish on Tesla and remain so, doubled down on their underperform rating on shares today: “Tesla has essentially exhausted its highend Model 3 backlog,” opines Needham, and “there is a strong possibility that the company may experience difficulty getting a sufficient number of new orders in the U.S. along with ramping internationally in order to remain profitable.”

(Needham also worries that the company may have trouble shifting production of battery packs over from larger, extended-range batteries to its smaller “Standard Battery” configuration to satisfy an uptick in demand for Model 3s with shorter ranges and lower prices.)

What it means to Tesla investors

Are these valid concerns? They certainly could be.

Tesla ramped up hiring and production rates last quarter, and in so doing set new records for production and deliveries — and earned its first quarterly profit in two years (and its second quarter of positive operating cash flow in a single year, according to data from S&P Global Market Intelligence). It did this, however, by capitalizing on pent-up demand for the Model 3, and by emphasizing production and sale of the model’s most expensive (and profitable) variants.

Going forward, that’s going to be harder to do if most of the demand for higher-trim Model 3s has now been satisfied — which is what Tesla’s moves to cut costs suggest here in the U.S. On the other hand, the company has just begun shipping Model 3s to Europe, where there’s still untapped demand for the higher-trim models, and deliveries to China are slated for March. This suggests there’s still hope for profits to continue going strong in the early part of 2019 at least.

Even if Tesla reports the anticipated decline in profits for Q4, strong guidance for the quarters to come could be sufficient to keep enthusiasm for the stock buoyant through earnings — and prove today’s naysayers wrong.

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