Elon Musk, CEO of Tesla, cut 7% of Tesla workforce today. He sent an email to employees and I have captured the key elements below (full email after bump). If you read this email, you will understand the intensity in startups and companies working to dramatically change the world. For the leaders and most times the followers, there are no vacation moments. Practically, Elon sees the workers as numbers, reminding them that there are companies where they could get “better work-life balance”. Yes, you are free to join Disney and ride waterflows for bliss, but if you stay, expect nothing but high intensity. He went further to remind “those remaining” that even though Tesla will reduce manpower by 7%, Tesla must still improve production rate. You cannot miss his use of the phrase “advance our mission” because this is a Call. Entrepreneurial capitalism comes at a cost to people at the frontline. Do not miss why these transformers are unique!
Summary
“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….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…As a result of the above, we unfortunately have no choice but to reduce full-time employee headcount by approximately 7% …. Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months…To those departing, thank you for everything you have done to advance our mission…For those remaining…” Elon Musk
Company Update
January 18, 2019
This morning, the following email was sent to all Tesla employees:
As we all experienced first-hand, last year was the most challenging in Tesla’s history. However, thanks to your efforts, 2018 was also the most successful year in Tesla’s history: we delivered almost as many cars as we did in all of 2017 in the last quarter alone and nearly as many cars last year as we did in all the prior years of Tesla’s existence combined! Model 3 also became the best-selling premium vehicle of 2018 in the US. This is truly remarkable and something that few thought possible just a short time ago.
Looking ahead at our mission of accelerating the advent of sustainable transport and energy, which is important for all life on Earth, we face an extremely difficult challenge: making our cars, batteries and solar products cost-competitive with fossil fuels. 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.
In Q3 last year, we were able to make a 4% profit. While small by most standards, I would still consider this our first meaningful profit in the 15 years since we created Tesla. However, that was in part the result of preferentially selling higher priced Model 3 variants in North America. In Q4, preliminary, unaudited results indicate that we again made a GAAP profit, but less than Q3. This quarter, as with Q3, shipment of higher priced Model 3 variants (this time to Europe and Asia) will hopefully allow us, with great difficulty, effort and some luck, to target a tiny profit.
However, starting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles. Moreover, we need to continue making progress towards lower priced variants of Model 3. Right now, our most affordable offering is the mid-range (264 mile) Model 3 with premium sound and interior at $44k. The need for a lower priced variants of Model 3 becomes even greater on July 1, when the US tax credit again drops in half, making our car $1,875 more expensive, and again at the end of the year when it goes away entirely.
Sorry for all these numbers, but I want to make sure that you know all the facts and figures and understand that the road ahead is very difficult. This is not new for us – we have always faced significant challenges – but it is the reality we face. 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.
As a result of the above, we unfortunately have no choice but to reduce full-time employee headcount by approximately 7% (we grew by 30% last year, which is more than we can support) and retain only the most critical temps and contractors. Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months. Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard range (220 mile), standard interior Model 3 at $35k and still be a viable company. There isn’t any other way.
To those departing, thank you for everything you have done to advance our mission. I am deeply grateful for your contributions to Tesla. We would not be where we are today without you.
For those remaining, although there are many challenges ahead, I believe we have the most exciting product roadmap of any consumer product company in the world. Full self-driving, Model Y, Semi, Truck and Roadster on the vehicle side and Powerwall/pack and Solar Roof on the energy side are only the start.
I am honored to work alongside you.
Thanks for everything,
Elon
COMMENT ON LINKEDIN FEED
- Apparently, all”them seem to have the same opinion of the concept of “work-life balance”: Musk(Tesla),Jeff!(Amazon),even Alabbar(Emaar,UAE)- @diff.times,I’ve heard them stress this same interpretation of the concept with respect to their organizations. Now, I’m tempted to agree with them. So, if you wanna sign up with large-scale, visionary, & driven start-ups, you already beforehand know what it takes: it’s no tea party!
- The Madness in a Vision,that makes seemingly bad actions ultimately turn out for good,thats the defining characteristic of all Elons companies. It says,the accomplishment of the vision is as important as your commitment to work for us. Cant wait for their next hiring spree to commence. And you would still see the rush to be part of the vision.
- Pretty hard decision but a necessary one. I love his hashtagdrive. I can almost hear him say ‘Get your head in the game, this is our target and can’t settle for less! If you’re looking for easy or children’s stuff…not here’. And the assurance ‘for those still here, the future is bright, it is worth the sacrifice!’.
