Tesla recently let go of roughly 3500 of its employees, who make up 7% of the total workforce of the company. This move has been to give the company room to drop prices of its next car and therefore, increase profits.
California: There is something about Tesla which makes it the dream car brand of many. Be it the tweets by its CEO or the aesthetically pleasing design of its cars, we have all dreamed of owning a Tesla. And as would be expected, the company’s sales and growth rates usually stay on the high end of the spectrum. So what would have led the automobile giant to choose the dreaded path of job cuts?
The official answer is to cut production cost and price for its Model 3 Sedan and make it affordable to the masses. The automobile firm recently let go of 7% of its employees which equals roughly 3200-3500 people.
Fewer people to pay equals less production cost. Low costing, in turn, leads to space for a price drop, which appeals to the larger section of the crowd. By laying off people, the Musk-owned firm is actually expanding its scope for profits.
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Tesla plays in the electric vehicle arena and so far, the field lacks competition. Being the sole prominent player, the company has always found it easy to dominate the industry. However, to scale up to the plans for the new model it is planning to push out, capacity expansion is the need of the hour.
In conclusion, if Tesla plays its cards right, huge profits aren’t a thing of far away future.