Investor's Corner
Tesla is trimming 7% of its workforce amid preparations for $35K base Model 3 ramp
Tesla appears to be taking a rather painful step forward as it continues to ramp the production of its latest and most disruptive vehicle to date — the Model 3. In an update on Friday, Tesla Inc. stated that it would be cutting its full-time workforce by about 7%, amidst the company’s preparations to produce the most elusive version of the electric sedan to date — the $35,000 base Model 3.
In a statement to CNBC, Tesla noted that it is necessary for the company to implement manufacturing design improvements to enhance the economies of scale needed to produce the $35,000, 220-mile range vehicle. Following is Tesla’s statement to the news agency.
“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,” Tesla said.
The update on Tesla’s recent round of layoffs appears to have shaken the company’s investors. As of writing, Tesla stock (NASDAQ:TSLA) is down more than 5% in Friday’s pre-market trading.
The end goal for the Tesla Model 3 is to be a vehicle that is affordable enough to be accessible to the mainstream car market; hence, triggering a disruption of the auto industry. Priced at $35,000 before options, the Standard Range Model 3 costs roughly the same as a top-tier Toyota Camry, which tops out at $34,950 for the range-topping XSE V6 version.
Despite being a base variant, though, the $35,000 Model 3 is still loaded to the teeth with tech, including the necessary hardware for Autopilot and Full Self-Driving, as well as safety systems comprised of cameras, ultrasonic sensors, and radar. With its 220-mile range, 5.6-second 0-60 mph time, and top speed of 130 mph, the $35,000 Standard Range Model 3 RWD has the makings of a true fossil fuel car killer.
That said, building the $35,000 vehicle has proven to be difficult. Elon Musk has been pretty upfront about the challenges Tesla is facing with regards to the production of the Standard Range Model 3. During Tesla’s Q3 2018 earnings call, for one, Musk explained the reason why the company is still unable to produce the Model 3’s base variant.
“If we could produce a $35,000 car today, we would do it. We need more work, there is more work to do before in order to make a $35,000 car and have it be positive gross margin. We’re probably less than six months from that,” Musk said.
Amidst these challenges, though, Tesla has made adjustments to offer the Model 3 at a lower price for customers in the United States and Canada. The most prominent of these is the introduction of the 264-mile Mid Range Model 3, which was initially priced at $45,000 (later adjusted to $46,000, and most recently, $44,000). As the year begins and as the international ramp of the Model 3 starts in China and Europe, though, it appears that finally, Tesla is just about ready to get serious with the production ramp of its most ambitious vehicle to date.
Tesla has shared an email sent to employees from CEO Elon Musk about the new round of layoffs. Following is the entire message in full.
As we all experienced first-hand, last year was the most challenging in Tesla’s history. However, thanks to your efforts, 2018 was also the most successful year in Tesla’s history: we delivered almost as many cars as we did in all of 2017 in the last quarter alone and nearly as many cars last year as we did in all the prior years of Tesla’s existence combined! Model 3 also became the best-selling premium vehicle of 2018 in the US. This is truly remarkable and something that few thought possible just a short time ago.
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 has only been producing cars for about a decade and we’re up against massive, entrenched competitors. The net effect is that Tesla must work much harder than other manufacturers to survive while building affordable, sustainable products.
In Q3 last year, we were able to make a 4% profit. While small by most standards, I would still consider this our first meaningful profit in the 15 years since we created Tesla. However, that was in part the result of preferentially selling higher priced Model 3 variants in North America. 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.
However, 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.
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. There are many companies that can offer a better work-life balance, because they are larger and more mature or in industries that are not so voraciously competitive. Attempting to build affordable clean energy products at scale necessarily requires extreme effort and relentless creativity, but succeeding in our mission is essential to ensure that the future is good, so we must do everything we can to advance the cause.
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.
To those departing, thank you for everything you have done to advance our mission. I am deeply grateful for your contributions to Tesla. We would not be where we are today without you.
For those remaining, although there are many challenges ahead, I believe we have the most exciting product roadmap of any consumer product company in the world. Full self-driving, Model Y, Semi, Truck and Roadster on the vehicle side and Powerwall/pack and Solar Roof on the energy side are only the start.
I am honored to work alongside you.
Thanks for everything,
Elon
Update: 4:00 p.m. EDT – Charles Schwab has reached out to TESLARATI with the following statement, clarifying that it plans to vote FOR Musk’s compensation package:
“Schwab Asset Management’s approach to voting on proxy matters is thorough and deliberate. We utilize a structured process that focuses on protecting and promoting shareholder value. We apply our own internal guidelines and do not rely on recommendations from Glass Lewis or ISS. In accordance with this process, Schwab Asset Management intends to vote in favor of the 2025 CEO performance award proposal. We firmly believe that supporting this proposal aligns both management and shareholder interests, ensuring the best outcome for all parties involved.”
There have also been updates to the headline and various paragraphs to reflect this as well as accuracy.
Tesla investors are pushing Charles Schwab for clarification after it was expected to vote against CEO Elon Musk’s pay package.
Several high-profile Tesla influencers are speaking out against Charles Schwab, saying its decision to vote against the plan that would retain Musk as CEO and give him potentially more voting power if he can achieve the tranches set by the company’s Board of Directors.
The Tesla community appeared to see that Schwab is one firm that tends to vote against Musk’s compensation plans, as they also voted against the CEO’s 2018 pay package, which was passed by shareholders but then denied by a Delaware Chancery Court.
Schwab’s move was recognized by investors within the Tesla community and now they are speaking out about it:
Hey @CharlesSchwab – I need to speak with someone from Schwab Private Wealth Services this week. Please reach out via email, the mobile app message center, phone, or X DM.
Here’s why this is urgent: At least 6 of your ETF funds (around 7 million $TSLA shares) voted against… https://t.co/uSgPWnfTFc
— Jason DeBolt ⚡️ (@jasondebolt) November 3, 2025
If @CharlesSchwab doesn’t vote for Elon Musk’s 2025 CEO Performance Award plan, I’ll move all my assets to another brokerage. My followers, many of whom also hold assets with Schwab and collectively own at least hundreds of millions in $TSLA, may do the same.
I can’t in good… https://t.co/6iUU6PdzYx
— Sawyer Merritt (@SawyerMerritt) November 3, 2025
ready to help with the @CharlesSchwab exodus
— Gali (@Gfilche) November 3, 2025
At least six of Charles Schwab’s ETFs were expected to vote against Tesla’s Board recommendation to support the compensation plan for Musk. The six ETFs represent around 7 million Tesla $TSLA shares.
Jason DeBolt, an all-in Tesla shareholder, summarized the firm’s decision really well:
“As a custodian of ETF shares, your fiduciary duty is to vote in shareholders’ best interests. For a board that has delivered extraordinary returns, voting against their recommendations doesn’t align with retail investors, Tesla employees, or the leadership we invested to support. If Schwab’s proxy voting policies don’t reflect shareholder interests, my followers and I will move our collective tens of millions in $TSLA shares (or possibly hundreds of millions) to a broker that does, via account transfer as soon as this week.”
Tesla shareholders will vote on Musk’s pay package on Thursday at the Annual Shareholders Meeting in Austin, Texas.
It seems more likely than not that it will pass, but investors have made it clear they want a decisive victory, as it could clear the path for any issues with shareholder lawsuits in the future, as it did with Musk’s past pay package.
Elon Musk
Norway’s $2 trillion sovereign wealth fund votes against Elon Musk’s 2025 performance award
The fund is managed by Norges Bank Investment Management (NBIM), and it holds a 1.14% stake in Tesla valued at about $11.6 billion.
Norway’s $2 trillion sovereign wealth fund has voted against Elon Musk’s 2025 performance award, which will be ultimately decided at Tesla’s upcoming annual shareholder meeting.
The fund is managed by Norges Bank Investment Management (NBIM), and it holds a 1.14% stake in Tesla valued at about $11.6 billion.
NBIM’s opposition
NBIM confirmed it had already cast its vote against Musk’s pay package, citing concerns over its total size, dilution, and lack of mitigation of key person risk, as noted in a CNBC report. The fund acknowledged Musk’s leadership of the EV maker, and it stated that it will continue to seek dialogue with Tesla about its concerns.
“While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk- consistent with our views on executive compensation. We will continue to seek constructive dialogue with Tesla on this and other topics,” NBIM noted.
The upcoming Tesla annual shareholder meeting will decide whether Musk should receive his proposed 2025 performance award, which would grant him large stock options over the next decade if Tesla hits several ambitious milestones, such as a market cap of $8.5 trillion. The 2025 performance award will also increase Musk’s stake in Tesla to 25%.
Elon Musk and NBIM
Elon Musk’s proposed 2025 CEO performance award has proven polarizing, with large investors split on whether the executive should be given a pay package that, if fully completed, would make him a trillionaire.
Institutional Shareholder Services and Glass Lewis have recommended that shareholders vote against the deal, and initiatives such as the “Take Back Tesla” campaign have rallied investors to oppose the proposed performance award. On the other hand, other large investors such as ARK Invest and the State Board of Administration of Florida (SBA) have urged shareholders to approve the compensation plan.
Interestingly enough, this is not the first time that Musk and NBIM have found themselves on opposing sides. Last year, NBIM voted against reinstating Musk’s 2018 performance award, which had already been fully accomplished but was rescinded by a Delaware judge.
Later reports shared text messages between Musk and NBIM Chief Executive Nicolai Tangen, who was inviting the CEO to a dinner in Oslo. Musk declined the invitation, writing, “When I ask you for a favor, which I very rarely do, and you decline, then you should not ask me for one until you’ve done something to make amends. Friends are as friends do.”
Investor's Corner
Michael Dell points out practical advantage of Elon Musk’s proposed pay package
As pointed out by the Dell Technologies CEO, Musk will only be rewarded if he delivers extraordinary value to shareholders
Michael Dell has weighed in on Elon Musk’s controversial 2025 CEO Performance Award, offering a grounded perspective amidst the noise surrounding the pay package today.
As pointed out by the Dell Technologies CEO, Musk will only be rewarded if he delivers extraordinary value to shareholders. Musk would quite literally receive no compensation if he fails to achieve his targets.
Dell emphasizes results over rhetoric
Dell shared his thoughts about Musk’s 2025 CEO Performance Award in a post on X.“Vote FOR Elon Musk. The award is only achieved IF he hits exceptionally ambitious market-cap and operational milestones—if he falls short, he gets nothing,” Dell wrote in his post.
“If he succeeds, shareholders will win big through unprecedented value creation, and he will earn added voting rights to continue driving Tesla’s long-term vision.”
Musk replied with a short “Thanks Michael,” acknowledging Dell’s support. Dell’s framing cuts through the debate surrounding Musk’s compensation, as he simply focused on the incentive structure’s risk-reward balance.
Musk’s ambitious pay package
Elon Musk’s 2025 CEO Performance Award requires Tesla’s market capitalization to rise from roughly $1.1 trillion today to $8.5 trillion within a decade. This would make Tesla more valuable than any company in history.
Apart from this, Tesla’s operating profit must also grow from $17 billion to $400 billion annually. Musk must also lead the company to several product-related milestones, such as 20 million cumulative vehicle deliveries, 10 million Full Self-Driving subscriptions, 1 million Tesla Bots, and 1 million operating Robotaxis.
So far, proxy advisors Glass Lewis and ISS have urged shareholders to vote against the plan. Some prominent investors, including ARK Invest CEO Cathie Wood, however, have voiced strong support for the plan. Wood called Musk “the most productive human being on earth,” arguing that his vision and ability to attract talent are central to Tesla’s success.
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UPDATE: Tesla investors push Charles Schwab for Musk comp plan clarification
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