Your comments on Elon's letter to Tesla employees

[spinbackwards]

Howdy,

TSLA profit drop in Q4, 7% workforce cut planned after growing 30% last year

A lot of knowledgeable EV folks here, would love to hear from you.

I'll kick it off.

I dig Tesla, all that Elon is up to. Our P3D+ rocks.

But for me, this letter isn't exactly bullish.

He uses the s word - "survival".

I read he's asking his people to work more, ostensibly for less benefits. But doesn't say what's in it for his workers.

The company is relying on the 3 reaching the masses. Read between the lines, it's must happen soon and there's no room for things not going as planned.

He notes competition is coming. While I so far don't see a match to their tech, range, or infrastructure, it's coming. The big car companies have cash, dealers, and an install base that Tesla doesn't.

Tesla's charging network is certainly an advantage. But billions are being invested in charging networks.

I've become an avid forum user, I read the EV blogs. I don't get where Tesla's customers are fiercely loyal to the company in the way that Patagonia's customers are. Or if they are, it's not a significant enough percentage that's advantageous.

All the major car companies have announced EV's. Some, are retooling their brands around EV's. Tesla has proven the market demand, they broke the mold. To me, Elon is a hero. But to some degree they've done free marketing for their competitors. However Elon has always said if he loses, the world wins.

For me, if Elon wants to keep Tesla a growing car company - recognizing that Tesla is really a battery company -- now is the time to build loyalty with his people. If his people are all-in, customers will take it from there. Elon's customers have proven they're a great sales force, witness that Tesla hasn't ever and doesn't now - advertise.

In Let My People Go Surfing, Yvon Chouinard writes how once Patagonia was facing debt, their business was anything but certain. He was forced to lay-off employees. Doing so pained Yvon, he took it to heart. He vowed to never have to lay-off his people again.

So far, Yvon has delivered on his vow. Patagonia rebounded from that troublesome period to be one of the world's most valuable, recognizable, trusted, loyal, and leading brands. Patagonia is now unabashedly advocating for the environment. When you call their phone number or visit a retail store, you feel as though you're with friends.

I recently sent one of my Patagonia pieces in for repair. They sent me an email apologizing that the garment could not be repaired to their standard. They gave me a gift card equal to the value of last sale price for my piece. I paid $300 for the jacket. 3 years later, I got a gift card for $221. This isn't unusual, this is how Patagonia rolls.

In Elon's letter, he indicates priority #1 is sales. I disagree. Elon's priority should be his people. Because a great company is all about great people.

Here's to hoping Elon is studying Let My People Go Surfing.

Peace and love,

 

[Rockster]

Tesla's production ramp-up last year undoubtedly resulted in a demand for headcount that isn't required. To survive and be profitable Tesla cannot afford to keep any unnecessary staff on board. It's that simple. The number one priority is not keeping people on the payroll who are not critical to Tesla's mission and are not justifiable based upon their cost.

 

[tashtibet]

for the company to survive it has to evolve according to the people & market situation-so, Elon is opening a new chapters: Referrals over & work force reduced. They'll be little bit of hiccup but will calm down gradually.
Your Patagonia tale is interesting. I am a member of REI and very often bother/awake them to do more for environment. Telling them that nice & tough outdoor gears won't protect/preserve the outdoor & natural areas. That REI should reserve & install EV chargers on their parking lots like JAX outdoor gears do. That REI parking lots is most of the time full of gas/diesel guzzling vehicles-those drivers think they love nature while they also ruin/destroy it, too.

 

[hoang51]

I felt this type of information could've waited for the earnings.

 

[electracity]

To survive and be profitable Tesla cannot afford to keep any unnecessary staff on board. It's that simple.

There is no evidence that Tesla has unnecessary employees. There is plenty of evidence that Tesla is understaffed and underskilled in important operating areas outside of car production and core engineering.

Musk was boring holes when he should have been using his IT skills to oversee the design of those boring, mundane internal systems and procedures that every company needs.

"Alien Dreadnaught" is such a joke for a company that can't even properly manage car and parts inventory.

 

[Zhelko Dimic]

I felt this type of information could've waited for the earnings.

It's only fair to employees to let them know as soon as you know.
This is prime time to look for new jobs, to delay it even a month would be evil towards employees.

 

[electracity]

I felt this type of information could've waited for the earnings.

The likely reason for the timing is improving Q1 financials. The likely reason for the rush is a sharp edge to high end model 3 demand. Also, the benefit of losing perceived scarcity of the model 3 slows the sales process.

The model Y has always been planned as a hedge against unknown model 3 demand.

 

[hoang51]

It's only fair to employees to let them know as soon as you know.
This is prime time to look for new jobs, to delay it even a month would be evil towards employees.

No doubt that would be beneficial for those losing work. But to clarify my position a bit more, Elon doesn't need to spit out more financial information about the company and tank the stock. Just announce workforce cut. Mostly everything else could've gone into earnings conference that isn't too far down the road from now.

 

[thx1139]

This is where I parked this morning. It isnt just SuperCharger network. This is garage owned by city of Chicago. Over the last month city added 9 Tesla Destination chargers and removed 2 Chargepoint chargers. So now this location of the garage has 11 Tesla Destination chargers and 1 J1772 charger

 

[ricohman]

Never heard of pantagonia.
But if Tesla wants to survive they need a real car for the masses. That will mean trimming all costs.
And customer service must improve.
With the numbers of new owner model 3s I can’t see tesla continuing it’s present business model regarding dealers and used car sales.

 

[outdoors]

Can't imagine making those decisions. Let alone telling people.

That's when you look at the mission statement and say we might not succeed if we don't do this.

Thoughts are with all those families and people affected. Not a good experience I am sure.

 

[electracity]

But if Tesla wants to survive they need a real car for the masses. That will mean trimming all costs.

BMW doesn't make a car for the masses. I would like to see Tesla keep ASP at $50K. They aren't good enough at manufacturing to make a Camry.

 

[woodisgood]

It will be interesting to see whether or how long Tesla can survive in a purely capitalist economy but with the mission/ethos of essentially a nonprofit.

To truly have the impact that Musk envisions, as quickly as he believes is necessary, while remaining a public company - it will be a shoestring act with a lot of sacrifice.

 

[electracity]

Can't imagine making those decisions. Let alone telling people.

That's when you look at the mission statement and say we might not succeed if we don't do this.

Thoughts are with all those families and people affected. Not a good experience I am sure.

It's a culling of the weakest. It's a lot easier on management than firing for cause. Tesla will start hiring again, just as they did after the last layoff. Rinse and repeat.

It will be interesting to see whether or how long Tesla can survive in a purely capitalist economy but with the mission/ethos of essentially a nonprofit.

You have no idea of the reality of a venture backed high profile company.

 

[Zhelko Dimic]

No doubt that would be beneficial for those losing work. But to clarify my position a bit more, Elon doesn't need to spit out more financial information about the company and tank the stock. Just announce workforce cut. Mostly everything else could've gone into earnings conference that isn't too far down the road from now.

I see what you're saying but I feel it's a 'damned if you do it, damned if you don't' type of situation. I'm sure there would be speculations and accusations afterwards if he didn't do it. When in doubt, transparency is the best answer in my experience.

Real problem is that I'm a bit disappointed they got here, I feel demand modelling was done poorly if they couldn't get ahead of this a bit earlier. There are areas where Tesla outperforms, and I end up giving them a lot of credits, and then f...-up like this, cutting workforce again 6 months after the last cut, makes me question basic competencies...

But I've never watched evolution of the explosive growth company this closely, so it's possible that it doesn't get much better than this. Reading about it, doesn't give one the same emotional impact. I know other similar companies have had their blunders, e.g. AMZN, but it's hard to truly compare and draw conclusions about management competency or not.

I stopped playing short-term game, and I'm only long term TSLA now, so I don't care about detours, the only question I wrestle with is 'does Elon still got this, or are we reaching his capability to lead effectively?'

 

[WileyTheMan]

Having gone through my share of layoffs, it sucks. It really does. But looking at it objectively, layoffs and hiring sprees are a necessary function of a free capitalistic market. I wish companies kept employees on regardless of cost as a loyalty-building exercise (ie, IBM, HP from the old days of pensions) but that just isn't reality. Tesla's current CEO has brought the company this far. He seems to have a good head on his shoulders for business. I'll trust he knows what's best at this point in the game to keep the company healthy.

 

[sduck]

This should be in the Tesla, Inc subforum, not the model 3 forum. Can a moderator move it please?

 

[JBare]

BMW doesn't make a car for the masses. I would like to see Tesla keep ASP at $50K. They aren't good enough at manufacturing to make a Camry.

I hate to agree with you but never the less do. My MR ended up at $54k, a bit of a stretch for me, but in the long run the tax credit and gas savings made it doable and I freaking love this car!

Keep building/selling these and in 12-24 months there should be plenty on the used market coming in closer to $30k.

 

[Eno Deb]

BMW doesn't make a car for the masses.

They do, actually. They are selling variants of the 1- and 2-series below $30K in European and Asian markets, and they have the Mini brand in that segment as well. Lower-end versions of the 3 series are also significantly less expensive than the Model 3.

Musk's letter shouldn't be surprising to anyone who wasn't wearing rose-colored glasses. The addressable market in Tesla's current price range is limited, they aren't out of the woods regarding profitability, and they haven't yet figured out how to scale their business to the numbers they need to achieve sustained profitability.

 

[SMAlset]

It will be interesting to see whether or how long Tesla can survive in a purely capitalist economy but with the mission/ethos of essentially a nonprofit.

To truly have the impact that Musk envisions, as quickly as he believes is necessary, while remaining a public company - it will be a shoestring act with a lot of sacrifice.

I thought Sandy Munro pegged profit margins around 20% or more. Got the impression that was a pretty healthy number and what also convinced other mfgrs it could be done with EVs. With much in development on many fronts they do need to stay lean and mean and continue to be profitable.

We talked about the 7% news today and my husband felt all successful companies need to routinely make these adjustments. Guess its also a time to reduce areas that aren't performing as well as they should be. My initial reaction is that there are areas in staffing that need fixing and those that could use more people. But I guess having more employees doesn't always solve the problem. Having Tesla focused on the bottomline now is a good thing. I hate knowing employees will be let go though.

Even with all their money, production lines and dealerships it sounds like the other mfgrs are kind of freaking out about balancing what has been a pretty steady revenue stream for them with all this somewhat unknown, now dead serious venture into rethinking and reimagining their businesses in the era of what likely will be a BEV world for the most part. Their forward investment is huge and many see their survival as depending on not going it alone.

Few have the well-rounded employee workforce skill set and vertical in-house resources for this EV pursuit that Tesla does and they see that without it they could fail if they can't adapt somehow. Plus they also have new auto ventures coming in to compete against them targeting the very lines they are pursuing in some cases (thinking Ford with trucks and SUVs). I am reminded of the story of David and Goliath, Tesla needs to manage its size and be profitable and the big guys have more on the line in some ways to stay profitable with designs and tech that aren't even out there yet.