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
Investor's Corner
Tesla just did something in South Korea that no foreign carmaker has ever done
Tesla’s Model Y just became South Korea’s best-selling car, beating every domestic model in May.
Tesla did something last month that no foreign car has ever done in South Korea by outselling every vehicle in the country, domestic or imported, finishing the month with Model Y as the single best-selling car across the entire Korean market. According to data from the Korea Automobile Importers and Distributors Association released on June 4, the Model Y recorded 8,762 units sold in May, pushing the Kia Sorento into second place at 7,836 units and the Hyundai Grandeur into third at 5,183 units. It is the first time an imported vehicle has outsold every domestic model on a single-month basis.
Tesla imported 10,866 cars into South Korea in May, making it the top import brand for the fourth consecutive month. BMW followed at 6,555 units, less than two-thirds of Tesla’s total, while BYD registered just 1,032 units. The combined domestic sales of GM Korea, Renault Korea, and KG Mobility last month totaled just 7,019 units, meaning a single Tesla model outsold three Korean automakers combined.
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South Korea has historically been one of the hardest markets for foreign automakers to crack. Hyundai and Kia together control close to 70% of the overall market and carry deep consumer loyalty built over decades. Tesla’s path into this market was an uphill battle due to high import duties, limited service infrastructure, and early skepticism about charging networks. In 2024, the Model Y was the best-selling imported car in South Korea with 18,717 units for the full year. By 2025, after the Juniper refresh, it cleared 50,000 units and took the top spot among all EVs.
Year to date, Tesla has a 250.8% increase in the country over the same period last year, and now holds a 30.8% share of the entire imported car segment for 2026. EVs as a category represented 48.6% of all imported passenger car registrations in May. As Teslarati has reported, the Juniper refresh brought meaningful improvements to range, interior quality, and ride refinement that addressed the most common criticisms of earlier Model Y versions. Those upgrades appear to be resonating in markets like South Korea where buyers compare Tesla directly against high end domestic competitors.
The Ontario Teachers’ Pension Plan (OTPP) stands to reap one of the most extraordinary returns in pension fund history thanks to a bold 2019 investment in SpaceX.
According to a recent report from The Globe and Mail, the Toronto-based fund invested roughly $300 million CAD (~$220 million USD at the time) in Elon Musk’s space company as its inaugural deal through the Teachers’ Innovation Platform.
At SpaceX’s anticipated $1.75 trillion IPO valuation, set for a mid-June debut on Nasdaq under ticker $SPCX, that stake could now be worth up to $11.6 billion USD. This would represent a roughly 50x return and easily become OTPP’s most successful single investment ever.
The fund manages $279 billion in assets for approximately 346,000 working and retired teachers in Ontario, potentially delivering an average boost of around $33,500 per member if fully realized.
SpaceX has filed its S-1 and plans to price shares at $135 each, aiming to raise a record $75 billion in what would be the largest IPO in history, surpassing Saudi Aramco. The company reported $18.67 billion in revenue for 2025, driven primarily by Starlink satellite internet growth and NASA contracts, though it continues to post significant losses tied to ambitious R&D in Starship and AI initiatives.
Important pieces moving forward include:
- Starlink Expansion: The satellite broadband service is scaling rapidly, targeting global connectivity, especially in underserved rural and remote areas. This segment offers massive recurring revenue potential as numbers climb.
- Starship and Reusability Leadership: SpaceX’s fully reusable Starship aims to slash launch costs dramatically, enabling frequent missions, Mars ambitions, and lucrative government/defense contracts. Success here could unlock exponential growth.
- AI and Diversification: Recent moves, including ties to xAI, position SpaceX in high-growth AI infrastructure, broadening beyond traditional aerospace.
- Validation Scrutiny: While the $1.75 trillion target excites investors, analysts like Morningstar value the company closer to $780 billion, citing high multiples (around 90x trailing revenue) and execution risks. A 180-day lockup period will prevent early investors like OTPP from selling immediately post-IPO.
The irony has not been lost on observers. Ontario’s government previously canceled a Starlink rural internet contract amid political tensions involving Musk, yet the pension fund’s savvy investment, made when SpaceX was valued around $33-36 billion, and Starlink was nascent, delivers outsized gains independent of politics.
For OTPP, this windfall strengthens its already solid 111 percent funding ratio and underscores the value of patient, innovation-focused capital allocation.
For SpaceX, the IPO marks a new chapter: greater transparency, access to public markets for talent retention and growth capital, and heightened pressure to deliver on its multi-planetary vision.
All eyes are fixed on whether SpaceX can justify its lofty valuation through sustained execution. For Ontario teachers, the returns are already stellar, but SpaceX, like other Musk companies in the past, has plenty of things to prove. Perhaps the most ideal person for the job is at the helm, hoping to bring the company to a massive valuation.
Tesla has its answer to grow its automotive sales over the next few years, TD Cowen analyst Itay Michaeli says, but it just has to bring it to the U.S.
On Thursday, Michaeli reiterated his $490 price target and the ‘Buy’ rating he already held on Tesla stock (NASDAQ: TSLA). However, its automotive division has struggled to show sequential growth over the past few years, mostly due to its focus on AI and Full Self-Driving. Tesla already axed two of its lower-volume vehicles with the Model S and Model X earlier this year.
However, Tesla does not need to engineer an entire new vehicle to trigger an upward tick in sales; it just has to bring it from China to the U.S., Michaeli said.
He is talking about the Model Y L, a slightly larger version of the all-electric crossover that is already available in China. U.S. customers have been pleading with CEO Elon Musk to bring it to the country since its launch in Asia last year, but he’s not convinced of it because of the advent of self-driving and its importance in this particular market.
The problem is that Tesla owners have been requesting something larger that could fit a typical American family. The Model Y L is slightly larger than the standard Model Y, but some are concerned that it could still be too small to fit what most people might need.
Instead, they have asked for a full-size SUV from Tesla.
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Nevertheless, the Model Y L still presents a great opportunity for Tesla in the U.S., and Michaeli says that there is an additional sales opportunity of about 100,000 units, with demand potential falling somewhere between 60,000 and 135,000 units.
TD Cowen’s note to investors also analyzed that Tesla’s growth could come from a stock perspective as well, positively impacting the stock price, as it has been widely reliant on vehicle sales, even though Tesla has truly phased itself away from that being an important metric.
Tesla stands to gain greatly from the introduction of the Model Y L in the U.S., but only if Elon Musk sees it as a viable fit for the market. Families may need to see Tesla bring something larger to the U.S., or they might be forced to buy from another automaker that offers something that fits is needs for more interior space to haul around the kids.
Tesla tipped its hand at where Robotaxi is heading next
Tesla just did something in South Korea that no foreign carmaker has ever done
