Exclusive: Tesla's delivery team has been defeated in recent job cuts – sources

SAN FRANCISCO (Reuters) – When Tesla Inc. announced last month a second round of job cuts aimed at cutting costs, a crucial department was particularly affected. The automaker has more than halved the division that delivers its electric vehicles to North American customers, said two of the dismissed workers.

Some 150 employees of a team of about 230 people were fired in January at the Las Vegas plant, which carries tens of thousands of models 3 in the hands of US and Canadian buyers, a she said, announcing that the company was waiting for the pace of deliveries. slow down considerably in the short term.

The cuts, which had not been announced before, could fuel investors' worries about declining demand for Model 3 in the United States after the expiry of a major tax break for consumers and the fact that the car remains too expensive for most consumers.

Tesla said its goal this quarter is to provide cars to customers waiting in China and Europe.

"There are not enough deliveries," said one of the former employees at Reuters. "You do not need a team because there are not many cars pbading by."

Delivery of Model 3 was the company's top priority in the second half of 2018, as Tesla was trying to provide all buyers wishing to take full advantage of the US $ 7,500 tax credit before halving it at the end. of the year.

Model 3 is essential to Tesla's projects for long-term profitability. The company aims to record a profit every quarter of this year, hoping to sell more models 3 and continue to reduce costs.

Tesla declined to comment on job cuts in the delivery team. The company still has an undisclosed number of delivery personnel attached to other sites.

"EVERYONE ON THE PLANET"

Even before the downsizing of the delivery team, investors were wondering about the level of demand for model 3 that remained after Tesla's relentless campaign to supply buyers before the tax credit cut.

"Given the need to generate revenue to cover costs and generate revenue, the financial community should focus on the demand level of Tesla vehicles – especially Model 3," wrote Barclays badyst , Brian Johnson, in January.

The two former delivery men said the 2018 sales had left Tesla's list of reservations completely messed up by North American buyers willing to pay current prices of more than $ 40,000 to get their hands on a model.

The CEO, Elon Musk, originally announced in 2016 that the car would start at $ 35,000 – which caused a wave of reservations – but Tesla has not yet sold a car at this price despite two price cuts already this year.

"We sold just about every car we had on the ground and we called almost everyone on the planet who had already expressed the desire to own a Tesla to let them know that the tax credit was expiring. "Said the other former employee.

The company's Tesla employees have been rebadigned to participate, the source said.

"They said," Your job is now on the table, we need to have these cars delivered. Because if we do not deliver these cars, you do not have a job tomorrow, "said the former employee.

HALF OF A MILLION OF BUYERS

At the launch of Model 3 in July 2017, Musk said more than half a million buyers had deposited deposits on the new car. This sent 15% of Tesla shares over the next six weeks.

The company delivered 145,610 3 models in 2018, but all at prices well over $ 35,000. Musk said last week that a $ 35,000 version that could be sold at a profit might be in six months. Even with two price drops this year, the lowest price on a model 3 is now $ 42,900.

Musk argues that the demand for Model 3 is "incredibly high," but his company has not published any figures on it.

Asked by badysts last week's list of reservations, the outgoing chief financial officer, Deepak Ahuja, refused to reveal the number of people remaining, calling the list "irrelevant".

Musk said Tesla has several ways to boost demand, for example by offering leases or strengthening marketing efforts.

Models 3 coming out of the Tesla plant in Fremont, California, are aimed at Chinese and European buyers, said Tesla.

The two dismissed employees stated that delivery targets for North America, consisting primarily of US buyers, would be 55% to 60% as they were in the last quarter of 2018.

If Tesla does not reduce its prices quickly, it may lose potential customers – and already on its list of reservations – for the benefit of many German and Asian competitors whose electric vehicles will arrive in the US market this year. Each of the 200,000 first-time buyers of the new entrant will be eligible for a full federal grant.

Having already reached this figure, the US tax credit for Tesla buyers decreases by half, to $ 3,750 for the first six months of 2019, then decreases again by half in the second half.

Musk said last month that his "rough estimate" was that Tesla would start building Model 3 at $ 35,000 in mid-2019.

One source said it could revive US demand: "If a $ 35,000 model 3 was a good car and won the competition, I could see the demand skyrocket.