Elon Musk FIRES 4,000 Tesla Workers!
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Elon Musk has made the decision to fire over 4,000 Tesla workers!
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Holy smuckers mackerels, we got some big news out of Tesla this week. It seems like every single week we get some type of big news. And today we got some gigantic news out of Tesla.
Some people are taking this as a positive thing. Some people are taking it as a negative, it just depends on your outlook. So Tesla told employees it will cut about 9% of its workforce, trimming mostly salaried positions since it started here.
Tesla has added roughly 8000 jobs and currently employs approximately 46,000 workers. That’s quite a few there guys. Through this reorganization, it will shed around 4100 jobs 4100 jobs in mid May.
Tesla CEO he must have warned that the company was undertaking a thorough reorganization and that it would flatten its management structure. To be clear, Tesla will still continue to Hi, this is Elan musk talking now.
To be clear, Tesla will continue to still hire outstanding talent in critical roles as we move forward in there still a significant need for additional production. Production personnel Cales the people worked in the factories as to actually putting the cars together and whatnot, must send a letter to employees on Tuesday.
I also want to emphasize that we are making this hard decision now so that we never have to do this again. I’m just gonna say remember that Justin Bieber song Never say never. I’m just gonna say Ilan like like calm down the never stuff, okay.
Because all you’re going to look like is a hypocrite if three months from now six months from now a year from now all sudden you have to do more layoffs. It’s dangerous. It’s nice to say something like we hope to never have to do this again.
We hope to never have to do a layoff again. But to say never. We’re never ever going to do a layoff again. That’s like come on man like that putting yourself in a in a hard box in. That’s tough guys Tesla’s struggle to meet production targets and achieve profitability.
It has been burning through billions in cash as it tries to scale up production of his mass market model three sedan. Musk has said he expects Tesla to be profitable and cashflow positive in the third quarter. Okay, that’s that’s a big statement there.
Tesla is trying to reach a model three production rate of 5000 cars as we know, each week, and they’re trying to do this by the end of this month we are in right now. This is a actual, you know.
Screenshot of the letter he sent to employees in case any you guys want to pause that and kind of read it all the way through there it is there. So I did some numbers here. All right, let’s assume so he cut basically 4100 jobs.
All right, let’s assume for a second that on average, that employee cost per employee was $100,000. Okay, which might be a little low. Because when you talk when you’re talking about employee costs, you’re not just talking about salary and bonuses.
You’re also talking about healthcare, you’re also talking about additional tax expenses, you’re also talking about, you know, you need offices, and heating and cooling costs, all that type of stuff, there’s so much that goes into it.
So let’s assume just $100,000 is the total employee cost per employee, by cutting those jobs, that would save around $410 million per year, okay. But once again, these are salary positions, that tussle is probably a little more than that.
When you tack on to everything I’m thinking is more around $150,000 on average, total employee cost per employee, okay. And if you do the math on that, that’s around $615 million saved per year, okay, we’re talking about a massive amount of money here that’s going to be saved, you know, over this whole deal.
And, you know, it could be things that maybe, you know, sometimes when you get such a big corporation like this, and you can’t, you know, close to 10% of its workforce, sometimes, you know, sometimes 10% and I’m not saying all these employees were bad employees, or they weren’t doing.
You know, a good enough job or whatnot, but I’m saying you, when you have that many employees at a corporation, you know, you’re gonna have a big chunk of them that are not meeting up to expectations, okay.
If you had just imagine you ever been in school, you know, high school or college or whatever, and you had to do a project with a group of let’s just say four or five people, it at least one or two of those people was probably a lazy person.
If you had me in your group in high school, or middle school, like, like, I was that person that sucked. Okay, I was that person that was super lazy, it didn’t do crap and didn’t care about the project. Okay.
So, you know, out in the workforce, you’re always gonna have that, you know, out of every five people that say at least one person who’s not holding up their end of the bargain, okay? So sometimes these layoffs, not saying that all 4100 employees were bad employees a test, I’m just saying.
There’s probably a good chunk of them, that we’re not pulling their weight there and you just kind of got to get rid of them. And you know, this is a good way to do it. It’s a good way to do it before you ever reach profitability, because then you say, well, we were not profitable.
We’re losing money, rather than you know, it looks different. If you’re super profitable company that’s expanding and then you cut employees, it looks kind of bad on you, right? But when you’re not making any money, it doesn’t look that bad.
So that’s not the only news that came out this week. And also some Tesla and Home Depot news came out so Tesla is ditching Home Depot as its as a sales partner for its residential clean energy products.
See CEO Elon Musk revealed an email to his employees on Tuesday. That’s another part of the move of broader restructuring. And he This is what musk wrote and part of the email there. In addition to this company wide restriction.
We decided to not renew our residential sales agreement with Home Depot in order to focus our efforts on selling solar power in Tesla stores. And online, the majority of Tesla employees working at Home Depot will be offered the opportunity to move over to Tesla retail locations.
I think that’s a very smart move there in February this year, not that long ago was that four or five months ago, Tesla announced it with setup mini solar stores in around 800. Home Depot locations expansion was intended to help Tesla bring its renewable energy products to a wide audience, Solar City.
Which Tesla quadrant 2016 used to sell its systems via Home Depot stores, Tessa discarded the Solar City name and now they just use everything as Tesla brand new products. Now we’re going to talk about Elon Musk’s goals here in just a second, and kind of his vision on this.
But as of right now, this has been seen as a positive. So all of this news that came out today is being seen as a positive. As we see, as I’ve taken the screenshot, Tesla shares are up over $12 a share up around quote, you’re getting close to 4% on the day.
So it’s definitely seeing all this news that came out this reorganization is seen as a positive. So let’s talk about musk goals. Okay, Musk’s goals, what are his goals he has going on right now.
Well, in my opinion, his first and foremost biggest goal is to get to 5000 is to get to 5000 on the production number from model threes, okay, they want to get to this number. This is the number that’s been you know, talked about and talked about.
So I think that’s first and foremost the thing they want to do get to a place where they’re producing 5000 model threes per week. I think that’s his number one goal in mind right now. Okay, I think is number two goal in mind right now is honestly of trying to figure out Solar City. Okay.
I think this is something that he is having a little trouble figuring out right now, because they acquired Solar City and they I don’t think they’ve seen nearly the growth, they want to see they’re from the Solar City business, and they’re like, what the heck is going on.
Now something I think is an issue is they gotta understand these other companies that are in the solar industry, they have tons of boots on the ground, okay, tons of boots on the ground, knocking on doors, I get people every single week that come to my house, and try to ask the you know, to try to.
You know, sell solar products, okay, for all different types of companies. I’ve never once had a Tesla employee show up in my house, asking if I want to have, you know, solar. So all these other companies have massive amounts of boots on the ground.
You know, walk in the streets, and these guys make, you know, anywhere between a $500 commission to a $2,000 Commission, if you sign up and actually get the solar installed on your roof, when you got those type of boots on the ground.
You’re all these other solar companies and your tests, and you’re just selling in stores, I think you’re really limited. I think these other guys actually have a big competitive advantage by actually going to people’s houses. And that’s probably a pretty annoying job. Because I mean.
I cannot imagine most people are happy most the time, I don’t even answer the door anymore. But it’s like, like, the boots on the ground is a big thing when you’re trying to sell to someone that has a house, and you want to get solar out there.
So he’s trying to figure this Solar City business out. And I think, you know, a big part of it is just Tesla doesn’t have any guys out there where the Tesla salespeople, they’re in stores. Okay. Then the third part.
I think that his focus is I think he wants to you know, start making some profits, okay, this company is burning through cash, I think he’s got to turn around, and, you know, show that this company can be profitable, okay, this company has not been profitable yet.
They got to get to a point where they can show they can be profitable, they can show they can be profitable, it opens up a lot of things. One is getting investors off his back, okay, to one’s gonna attract way more investors Tesla.
Because then it becomes a profitable growing company, okay, rather than just a company that’s growing for growing sake. Right. And the last part is, then when you’re already making profits, you can take out way bigger and bigger loans.
If you if needed to do whatever it is you want to do out there and achieve whatever it is you want to achieve. I think, you know, I certainly think that banks would give, you know, Elan musk and Tesla more more cash and more loans out there.
But when you start making profits, it makes it so much easier on the bank because then you say, Hey, we just made a billion dollars in profit last quarter, we want to take out this $5 billion loan over here.
We’re doing okay, but we need to we need that money to expand here in there. So banks are much more likely to loan you money we’d like think about you know, think about what Apple does with their bonds and whatnot.
You know, Apple can get money so easy, like anybody will loan any any, anybody will loan Apple any amount of money because there’s no almost no risk there. Right. And that’s why Apple’s been able to take out 100 or $200 billion, basically in loans over the past year to the day like that’s a huge amount guys.
It’s mind boggling, like 100 to $200 billion in loans apples taken out over the last few years. Okay, that’s a huge amount but when Apple is making so much in profits, when they got all those profits pouring in.
It’s nothing to give Apple you like like okay, Let’s give Apple loans they got all that cash on the balance sheet, they got all those investments to make your two or 3% is almost guaranteed money, like, like, let’s just do it.
So when you make profits, then it makes everything easier, he can get bigger loans, which means he can expand into this and that and as things goes on, he can just kind of keep the company or 510 years out ahead of where all the competition is what she’s been able to do very successfully.
Is just getting to a harder place now. You know, investors want to see profits, the banks want to see profits, everybody that’s loaning money, they want to see profits. He’s trying to figure out this Solar City business, you know.
I think they got to get boots on the ground. I think that’s a big thing and the 5000 model threes per week. That’s where investor focus is right now. And I think that’s his number one goal at the particular moment. But anyways.
I would love to hear from you guys in the comment section. Do you take this as a positive news that came out of Tesla here today? Do you take it as negative news? There’s some debate around that, you know, you lay off employees, is that a positive or negative? You know.
I would love to hear from you guys in that comment section. As always, thank you for watching. Have a great day.