Tesla sent a company email yesterday to reveal a 7% cut of its full-time workforce. The decision was taken to make Model 3 more affordable as buyers will not be able to enjoy federal tax credits by the end of this year. The Model 3 comes in three variants offering Standard, Mid Range, and Long Range versions with 220-miles, 260-miles, and 310-miles range respectively.
Tesla also pointed out that they have cut these 7% jobs after an increase of 30% last year. According to Bloomberg, this cut would translate to more than three thousand persons losing their livelihood.
Tesla is not the only automaker cutting jobs in the automotive industry; Jaguar Land Rover has also announced to cut 4,500 jobs owing to slow sales. Additionally, Ford has hinted to cut jobs in Europe while GM also wants to cut some percentage of its workforce due to slow sales of its sedans.
The job cuts at Tesla to make model 3 more affordable is a clear sign of shifting focus toward profitability. The company reported their first ‘meaningful profit’ in the last quarter of last year in its 15 years of operations.
Elon Musk is also aware of the fact that fourth-quarter profits were higher for a reason. The buyers were eager to own fully loaded Model 3 versions instead of opting for standard versions. As Tesla starts shipping more affordable Model 3, the profits will fall naturally.