Tesla: Focus on standard-range Model 3

Tesla has today published a blog and according to it, the company will cut workforce by 7 % in order to meet the targets regarding the Model 3 production and focusing also more in mid-range models.

-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, the CEO Elon Musk writes.

-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, he continues.

– 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, he says.

Tesla shares were trading down, -9,9 % to 312,79 dollars, after the blogging in Wall Street on Friday. Company also reminded that it made 4 % profit during the Q3. The last quarter figures of the year 2018 are not yet published.

– 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, he estimated.

 

 

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Elon Musk: 1 million cars by 2020

 

Tesla Motors (TSLA) CEO Elon Musk said that he still believes the target of 1 million cars by 2020 is relevant. He confirmed his earlier estimate of the growth during the conference call this week.

The company announced last year figures, which stated that the company is
targeting a weekly Model 3 production rate of 2,500 by the end of Q1 and 5,000 by the end of Q2. Tesla is also focused on achieving its target of 25% gross margin for Model 3 after company´s production stabilizes at 5,000 cars per week.

In the company press release Tesla said it will be the best manufacturer of automotive industry. The Model 3 reservations remained stable during the last quarter of the 2017, but in recent weeks the growth has continued. Combined Model S and Model X deliveries increased by 10 % during the last quarter, which was also an 28 % increase from year earlier.

During the last quarter Tesla continued to open new stores and service locations and now there are 330 locations globally. There are 1128 Supercharger stations globally at the moment.

In the outlook statement Elon Musk expects  the company  quarterly operating income to turn sustainably positive at some point in 2018.

 

 

 

Lifestyle

Tesla to fund the growth – 500 million dollars stock offering

Tesla Motors Inc. (TSLA) has announced a 500 million dollars stock offering. According to the company release this public offering will accelerate the growth of Tesla Energy, development of the new Model 3 and the Gigafactory.

Underwriters for this offering are Goldman Sachs, Morgan Stanley, JP Morgan Chase, Deutsche Bank, Bank of America and Wells Fargo.

Elon Musk, the CEO of the company, will buy shares worth 20 million dollars. The company made the IPO in June 2010 and raised capital worth 226 million dollars. After that the company has raised debt offerings including also the credit line of max 750 million dollars in June 2015.

According to the company interim report in early August 2015 the company said it will expand its network of Tesla Stores, service centers and Supercharges. The new model of Tesla car, the Model 3, is expected to the markets during 2016 and the world´s largest battery manufacturing facility is expected to be ready during 2017. The factory is based in Nevada and the initial investment of the facility and equipment was 5 billion dollars.

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