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Published on January 20, 2019 |
by Steve Hanley
January 20, 2019 by Steve Hanley
While Tesla was going through a "production hell" with Model 3 last year, Elon Musk tweeted that he had underestimated the value of human workers. The Model 3 badembly line was the most automated in the world, but many machines were not properly calibrated or failed, resulting in slowdowns. Tesla responded by hiring more workers and increasing its workforce by about 30%.
On January 18, the company announced the dismissal of about 7% of its full-time workers and warned that fourth-quarter profits would be lower than those of the previous quarter. In the third quarter, the company made a modest profit of just under 4%. For the fourth quarter, Elon says that the company will be profitable again but that this profit will be "minimal". The actual numbers will not be officially released until the next investor conference call in early February. (In the meantime, if you're interested, Vijay has published his estimates.)
Musk justified the decision to fire about 3,000 workers, saying the company needed to find ways to reduce the cost of its cars. "In our mission to accelerate the advent of sustainable transportation and energy, which are important to life on Earth, we face an extremely difficult challenge: to make our cars, batteries and batteries our cost-competitive solar products versus fossil fuels.
"Although we have made great progress, our products are still too expensive for most people. Tesla has only been producing cars for about ten years and we are facing huge competitors. The net effect is that Tesla has to work much more than other manufacturers to survive while building affordable and sustainable products.
"[T]The road in front of us is very difficult. This is not new to us – we have always faced significant challenges – but that is the reality we face. Many companies can offer a better work-life balance because they are larger and more mature, or in less competitive sectors. Trying to make clean and affordable energy products on a large scale necessarily requires extreme effort and creativity, but to succeed in our mission, it is essential to ensure that the future is good. We must therefore do everything in our power to advance the cause.
"Greater volume and manufacturing design improvements are essential for Tesla to realize the economies of scale required to manufacture the standard range (220 miles), the standard domestic interior model at $ 35,000, viable business. There is no other way. "
The news caused a free fall in the shares of Tesla, which lost 13% during the trading day on Friday, reducing by a few notches the list of the most valuable car manufacturers – from No. 4 to No. 7.
And, of course, that brought with it the usual badortment of "I told you years ago that Tesla would be nothing at all," opponents of Wall Street. One of them is Forbes Jim Collins, a contributor, wrote that the decline in quarterly earnings is exactly the opposite of what investors want to hear.
"This decrease in the margin would indicate that the benefits of the scale do not occur at all in Tesla. It's a deadly blow to the bullish arguments of the title. Car manufacturers are generally perceived as having a monstrously large mbad of fixed costs that can be amortized over production. More production should therefore be synonymous with both higher dollar profits and higher profit margins. a large number of very expensive and high margin versions of the 3rd to 3rd quarter model, then many more affordable versions of the 3rd to 4th quarter model.)
Bret Kenwell, writing for The streetis concerned that the fall in the share price will make it difficult for Tesla to redeem the $ 920 million convertible bonds maturing on March 1. "In the third quarter, Tesla posted positive and profitable cash flow. In the fourth quarter, Tesla should be able to make the payment in March, even if everything is in cash. However, Tesla will arrive at an unfortunate time as it tries to open its Shanghai factory before the end of the year, continues to expand its Supercharger network and has several new models.
Tesla is a high-flying actor for 15 years. Many badysts and journalists have announced the impending death of Tesla 10 years ago. Its stock is one of the most volatile and has always been. Chances are, this will continue to be. The conversion price of these convertible bonds is $ 359.88. "[I]It is still possible that Tesla's shares could rally above this conversion price in time to pay some of the debt with shares. After all, we have more than a month left and we've seen more crazy things than a 20% takeover of Tesla's share price in a short time, "writes Kenwell.
In summary, do you trust Elon Musk or not? Some very big investors – like Tencent, Baillie Gifford, Ron Baron and Larry Ellison – bet on Elon and Tesla. Nervous shareholders should perhaps pay more attention to what the main investors in the company say than the words of so-called badysts who are paid to do good.
As Elon says, the road will be difficult. The 3,000 dismissed people can not be very happy to be unemployed. Despite the pressure and tough working conditions, Tesla is still considered one of the best workplaces in the industry. In the end, Musk knows that his overall plan is based on making electric cars that more people can afford. This is good news for the electric car revolution, but the road will not always be easy.
Keywords: Elon Musk, Tesla, Tesla Jobs, Tesla Layoffs, Tesla Model 3
About the author
Steve Hanley Steve talks about the interface between technology and sustainability at home, in Rhode Island, and wherever the singularity could take him. Its motto is "Democracy, it's socialism". Do you have a problem with that?
You can follow him on Google + and on Twitter.
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