Chinese Job Cuts Undermine Tesla Motors Inc (NASDAQ:TSLA) Vision To Grow

Tesla Motors Inc (NASDAQ:TSLA) has announced plans to make mass cuts to jobs in China. Identifying China as a market essential for developing technology the electronic car makers continue to stall in that country. While the company did not reveal the details of the job cuts, the company did not confirm nor deny varying reports. One such report is that the pioneering company planned on making redundant 30% of its workers in China. According to those reports, this amounted to approximately 180 workers.

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Contrastingly, the new development has come on the heels of the company almost doubling its worldwide staff in 2014. This was done in a bid to grow its sales by approximately 467,000 from the 2014 figure of 33,000 to 500,000. Additionally, the company recently obtained a new 431,000 sq ft complex in California, expanding plant usage. In 2014, the company grew its administrative and selling and general cost to $603.7 million, an increase of $318.1 million. Additionally, the company had invested an increased $232.7 million to $464.7 in 2014 up from $232 million in 2013. This massive increase is because Tesla Motors Inc (NASDAQ:TSLA) has been aggressively pursuing astronomical growth.

Hence, news of the mass job cuts in China does not only represent a shift in policy but also the company’s inability to meaningfully infiltrate that market. In an attempt to achieve unprecedented growth, Telsa has recorded severe losses. The company’s fourth quarter losses worsened to $108 million making a mockery of the analysts’ predictions. More astonishingly is that this underperformance comes after revised targets were set for varying reasons. One such reason included consumers having concerns about that country’s ability to charge these vehicles. Unless the market climate changes, Tesla Motors Inc (NASDAQ:TSLA) will continue to struggle in this promising but tough market.

About the Author

Terrel is US Markets Daily's business news reporter. She joined US Markets Daily after five years as a print reporter.

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