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Tesla More Than Halves Delivery Team Of Model 3: Reuters

Tesla More Than Halves Delivery Team Of Model 3: Reuters
The department of US electric car maker Tesla that was the worst hit in the second round of job cuts that was implemented in the company to bring down costs was the unit that delivers electric vehicles to North American customers. According to a report published by Reuters citing workers of the department who had been laid off, the number of employees in the division was halved which is impeding the delivery of its vehicles in the country.
The report, quoting the former employees, claimed that out of a total of 230 employees in the division, about 150 were asked to leave their hobs in January this year. These employees were working with the Las Vegas facility. This department is responsible for making possible the hand on delivery of thousands of Model 3s of the company into the hands of customers in the U.S. and Canada. According to analysts, this lay off indicates that the company is expecting a significant drop in demand for the vehicles in the near future. 
These layoffs had not be reported previously and according to analysts, the news could impact the confidence of investors as it can be perceived that there would be a drop in the demand of the Model 3 in the US following the slow phase out of the governmental tax rebate accorded to electric vehicles for consumers. The demand is expected to tail off as the price of the vehicles would increase because of the phasing out of tax benefits for most consumers.
The company has possibly therefore announced that in the current quarter, it would focus on delivering its cars to consumers in Europe and China.
“There are not enough deliveries,” one of the former employees reportedly told Reuters. “You don’t need a team because there are not that many cars coming through.”
In the second half of 2018, Tesla focused on delivery of the Model 3 as the company attempted to complete the deliveries to consumers in the US who had been waiting on their orders and wanted to take advantage of the full tax benefits amounting to $7,500. The tax benefit has been cut to half at the start of 2019.
The success of Model 3 is crucial for the long term profitability of Tesla as the company plans to make profits in all of the quarters in the current year.  This target is based on its confidence of increase of sale of Model 3s and a cut down of operational costs.
There was no comment from Tesla in the report
But even before Tesla cut down on its delivery team, questions were being raised by a section of investors about the demand level for the Model 3 following the company stressing on completion of all demands for the vehicle before the reduction in the tax credit. “Given the need for revenue to cover costs and generate cash, the financial community should be focused on the level of demand for Tesla vehicles – in particular the Model 3,” wrote Barclays analyst Brian Johnson in January.

Christopher J. Mitchell

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