Tesla Reduces Production of Model S and X Cars

Elon Musk’s Tesla announced a reduction in the production of its Model S and Model X vehicles, resulting in its share price dropping sharply this week.

Bloomberg reports that concerns about the demand for Tesla vehicles have been reignited following the company’s announcement that it will be lowering the production hours spent on Model S and Model X vehicles. According to both current and former Tesla employees, the electric car maker has set significantly lower production targets for the Model S and X vehicles; this was later confirmed by Tesla.

This decision by the company reportedly relates to its previous announcement that it was no longer going to accept orders for their entry-level versions of the Model S and X vehicles from January 14 on. In a statement to Bloomberg, Tesla said: “We recently announced that we are no longer taking orders for the 75 kWh version of Model S and X in order to streamline production and provide even more differentiation with Model 3. As a result of this change and because of improving efficiencies in our production lines, we have reduced Model S and X production hours accordingly.”

Last week Elon Musk announced via Twitter that Tesla’s referral program — which offered Tesla owners the chance to earn six months of free supercharging by referring a friend to purchase a Tesla — will end on February 1. It was also announced last week that Tesla would be cutting seven percent of its workforce; in an email to employees Musk stated:

Looking ahead at our mission of accelerating the advent of sustainable transport and energy, which is important for all life on Earth, we face an extremely difficult challenge: making our cars, batteries and solar products cost-competitive with fossil fuels. While we have made great progress, our products are still too expensive for most people.

Tesla also attempted to offset a reduction in the federal tax credit for its vehicles earlier this month by cutting the prices of all models by $2000. Tesla isn’t the only one of Musk’s companies implementing cost-cutting measures. Breitbart News recently reported that Elon Musk’s space exploration firm SpaceX plans to cut ten percent of its current workforce in order to manage costs. The company said in a statement that the sudden layoffs are in an attempt to become a “leaner company” and that they only needed to be done due to “the extraordinarily difficult challenges ahead.”