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Delivery team of Tesla badly hit by job cuts last month

International Business
Sun, 10 Feb 2019


SAN FRANCISCO: When Tesla announced last month a second round of job cuts to rein in costs, the delivery department was particularly badly hit.

The carmaker more than halved the division that delivers its electric vehicles to North American customers, two of the laid-off workers said.

Some 150 employees out of a team of about 230 were let go in January at the Las Vegas facility that gets tens of thousands of Model 3s into the hands of US and Canadian buyers, they said, in a sign the company expected the pace of deliveries to significantly slow in the near term.

The cuts, which have not been previously reported, could fuel investor worries that demand for the Model 3 in the US has tailed off after a large tax break for consumers expired last year and the car remains too expensive for most consumers.

Tesla has said its focus this quarter is on supplying cars to customers waiting in China and Europe. “There are not enough deliveries,” one of the former employees said.

“You don’t need a team because there are not that many cars coming through.”

Delivery of the Model 3 was the company’s key priority in the later half of 2018, as Tesla tried to supply all buyers wanting the full benefit of the $7,500 US tax credit before it was cut in half at year’s end.

The Model 3 is crucial to Tesla’s plans for long-term profitability. The company aims to post a profit in each quarter this year, based on the expectation that it will sell more Model 3s and continue to cut costs.

“Given the need for revenue to cover costs and generate cash, the financial community should be focused on the level of demand for Tesla vehicles – in particular the Model 3,” wrote Barclays analyst Brian Johnson in January.