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Tesla is facing ‘hard times ahead’ as it cuts 7% of its workforce

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Tesla is reducing its full-employee headcount by 7%, Elon Musk announced in an email sent to employees on Friday. 

The layoffs are necessary if the company plans to keep turning profit as it starts delivering cheaper variants of the Model 3, Musk wrote. The company will also 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,” Musk wrote.  Read more…

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Tesla to recall 14,000 Model S cars in China over faulty Takata airbags

China’s top market regulator said on Friday that Tesla will recall a total of 14,123 imported Model S vehicles in the country over potentially deadly airbags.

The recall is part of an industry-wide crackdown on Takata-made front passenger airbags, which involves roughly 37 million vehicles including more mainstream brands such as Toyota and Ford, as noted by the United States Department of Transportation. These defective airbags use a propellant that might rupture the airbag and cause serious injuries, or even deaths.

Tesla has begun a worldwide recall of its sedans that use Takata airbags, the firm said on its Support blog. It noted that the airbags only become defective based on certain factors, such as age. The recall does not affect later Model S vehicles, Roadster, Model X, or its more affordable Model 3.

The China recall involves Model S cars manufactured between February 2014 to December 2016, shows a notice posted on the website of China’s State Administration for Market Regulation. TechCrunch has reached out to Tesla for comments and will update the article once more information is available.

The setback comes as Tesla is making a big push into the world’s largest auto market and tapping on Beijing’s effort to phase out fossil-fuel cars for China. The company recently reached an agreement with the Shanghai government to build its first Gigafactory outside the US, which will focus on making Model 3 cars for Chinese consumers. There is no target date for the factory to become fully operational yet.

Despite being an alluring market, China has been a major source of Tesla’s concerns over the past months due to escalating trade tensions and the rollback of government subsidies for green vehicles. Tesla responded by slashing its Model 3 price by 7.6 percent for China to neutralize heavy tariffs on imported cars.

The Palo Alto-based company previously recalled 8,898 Model S vehicles in China over corroding bolts, which it claimed at the time had not led to any accidents or injuries.

Tesla will end its buyer referral program for ‘adding too much cost’

At the end of the month, Tesla will end a long-running referral program that offered incentives for existing Tesla owners to help drive sales. In its recent iterations, the referral system gifted new buyers who found their way to a Tesla through a friend with six months of free charging at Supercharger stations.

Most recently, the referring friend would become eligible for a set of characteristically outlandish prizes, from launching a chosen photo into deep space orbit to a VIP invite to one of the company’s flashy unveiling events, depending on how many qualifying referrals were made. Tesla’s oft-chatty chief executive characteristically announced the news in a tweet.

The referral program was a clever choice by a company with such intense loyalty, putting many Tesla acolytes to work by turning them into semi-compensated brand ambassadors. Unfortunately for them, it wasn’t sustainable.

In follow-up tweets, Musk added more insight to the decision to end the program, noting that the whole thing was “adding too much cost to the cars, especially Model 3.” He further clarified that the program wasn’t being replaced by something new. Instead, “the whole referral incentive system will end.”

Tesla owners will have until the end of the month to hustle for existing incentives. Tesla orders must be placed before February 1 to be eligible. How hard can it be to talk your acquaintances into impulse-buying a high-end all-electric status symbol within a month’s time?