The electric car manufacturer is planning a second job cut in the same year in an attempt to improve its profitability along with the reduction in the prices of its Model 3. According to a statement issued by the company, it aims at cutting down 7 percent of its workforce that works on full-time basis. The company has been striving hard in order to pump up the production of Model 3 along with several efforts to sell it at a price of $35K. In one of the memos issued, the CEO Elon Musk has said that the company has gained some profit in last 3 months of the year but it has been quite low as compared to 3rd quarter.
He also said that the company can achieve small amount of profit in the current quarter but it will all huge amount of efforts along with some luck as it would be severely difficult. Palo Alto’s shares have declined by 13% after the statement issued by the company. Musk has said that the company is undergoing a huge pressure as it is being compelled to cut down the prices of its cars after the cut down of tax credit by U.S Federal. Last year, the tax credit amount was around $7500 which has been slashed down to $3750 in this year.
According to the federal laws, the tax credit facility is provided only for initial 2Lakh vehicles which are sold by any manufacturer in the US market. Now Elon Musk’s Tesla has already crossed this limit in the year 2018 itself. The provision made in the law eliminates the credit step by step by going on lowering it. The reduction in the credit amount is making it compulsory for the company to reduce the price of those cars