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.
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“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.
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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
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SpaceX will report second quarter results after the market closes on Tuesday, August 4, marking the first time the company has opened its books to the public since its record IPO in June. Management will host a live audio only webcast at 4:30 p.m. ET, streamed on X, with no dial in option.
The debut carries more weight than a typical first quarter as a public company. Two trading days after the release, on August 6, the first tranche of SpaceX’s lockup expires, freeing roughly 911.5 million insider and employee shares, worth well over $100 billion at current prices and the largest such release in Wall Street history. A second, larger tranche tied to the stock trading 30 percent above its $135 IPO price never triggered, since shares have spent most of July trading below that price.
Wall Street’s models point to revenue near $6.9 billion for the quarter, up sharply from the $4.69 billion SpaceX reported in the first quarter, with a narrower per share loss than the $1.27 posted three months earlier, according to estimates compiled by Motley Fool. Those numbers will be the first look at how SpaceX’s three segments, Starlink, launch and AI, are performing independently.
SpaceX scores another massive Pentagon deal to support military satellites
Investors heading into the call have a specific list of questions. How many net new Starlink subscribers did SpaceX add after ending March with 10.3 million, and is average revenue per user holding up as the service expands into lower income markets. How much of the AI segment’s revenue reflects contract signings with Anthropic, Google and Reflection AI this year, deals that combined could annualize to nearly $28 billion if fully ramped. Whether capital expenditures, which nearly doubled in the AI segment alone between 2024 and 2025, are still accelerating or starting to plateau. And whether management offers any forward guidance at all, something SpaceX has never done publicly.
The report will also land days after Elon Musk publicly denied a Wall Street Journal report describing internal planning to separate Tesla’s China business ahead of a potential Tesla-SpaceX merger. Whether Musk or SpaceX executives address that speculation on the call, even indirectly, maybe something investors will be listening for on Tuesday.
As Teslarati reported after Musk’s own warning to short sellers last week, the CEO has made clear he expects skeptics to be proven wrong over time. Tuesday will be the first chance for the numbers themselves to make that case.
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Elon Musk
Tesla AI boss reveals how big Optimus is going to get
Tesla’s Optimus chief corrected himself on X, confirming a staggering 10 million robot production target.
![Tesla Optimus Gen 3 [Credit: Tesla]](https://www.teslarati.com/wp-content/uploads/2026/03/tesla-optimus-gen3-diner.jpg)
Tesla’s Optimus program has a new number attached to it, after Ashok Elluswamy, the executive who has run the humanoid robot program since June 2025, posted a three word correction on X Thursday, “Correction, 10 million robots.”
The line clarifies the long term annual capacity Tesla is building toward its planned second Optimus production line at Gigafactory Texas, a figure Musk has cited repeatedly since last year’s shareholder meeting.
The scale is worth noting, because ten million robots a year would mean Tesla building more units annually than most countries sell in new cars. Tesla has framed this as a second line, not the first. The buildout is happening in two phases: a roughly one million unit per year line inside Tesla’s Fremont factory, installed on the floor space vacated when Model S and Model X production ended earlier this year, and a much larger dedicated facility under construction at Giga Texas that broke ground on its first steel structure in May. That Texas facility is the one Elluswamy’s correction refers to, and is expected to reach volume production sometime in 2027.
Correction, 10 million robots https://t.co/0z4nyQNTzp
— Ashok Elluswamy (@aelluswamy) July 30, 2026
Tesla Optimus project fires up as Musk sees production line progress
Elluswamy took over Optimus from Milan Kovac last summer and has spent the months since talking up the program’s trajectory. Elon Musk has also floated the ten million figure at Tesla’s 2025 shareholder meeting.
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Ending Model S and Model X production to make room for the first Optimus line was one of the more consequential manufacturing decisions in the company’s recent history, retiring two flagship vehicles in favor of a robot that has yet to enter mass production. Musk has previously estimated per unit production costs at $20,000 to $25,000 once Tesla reaches a million units a year, though he hasn’t said what that cost looks like at ten times the volume.
SpaceX just picked up another $1.6 billion from the Pentagon, with the U.S. Space Force awarding two task orders worth $1.6 billion to fly 18 Falcon 9 missions from Vandenberg Space Force Base in California through the end of 2027. The launches will carry satellites for the Space Based Sensing and Targeting portfolio, a set of programs meant to help the military detect and track airborne threats and relay that information across forces in near real time.
The award falls under National Security Space Launch Phase 3 Lane 1, the Space Force’s faster, commercial style procurement track for missions that do not require the military’s most demanding certification process. It is also the largest single order publicly disclosed under that program so far, and the first task order issued since the Space Force nearly tripled Lane 1’s contract ceiling from $5.6 billion to $17 billion on July 17.
SpaceX to become America’s Military data backbone for missiles, drones, and warfighters
Eric Zarybnisky, the Space Force’s acting portfolio acquisition executive for space access, said the entire process, from identifying the requirement to signing the contract, took about two months, including a month set aside for companies to prepare proposals.
SpaceX is not just launching these satellites. It already holds the contracts to build two of the programs within the same portfolio, $4.16 billion for the Space Based Airborne Moving Target Indicator system and $2.29 billion for the Space Data Network Backbone, which Teslarati covered in May. That means SpaceX is now responsible for both building key pieces of the military’s next generation sensing network and getting them into orbit.
With this latest award, SpaceX’s Pentagon contract total for 2026 alone tops $8 billion, adding to a defense portfolio that already includes the Golden Dome missile defense software group SpaceX joined in April and a string of GPS launches it inherited after ULA’s Vulcan rocket ran into a booster anomaly, which we detailed in March.
Lane 1’s vendor pool technically includes seven companies: SpaceX, ULA, Blue Origin, Rocket Lab, Stoke Space, Impulse Space, and Relativity Space. In practice, SpaceX remains the only provider with the combination of launch cadence, flight proven Falcon 9 hardware, and West Coast infrastructure to support a campaign requiring roughly one Vandenberg launch a month for the next year and a half.
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Some lawmakers have flagged the growing concentration of national security launches with one company as a risk worth watching. For now, the Space Force keeps backing SpaceX, with it being the company that shows up ready to launch.
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