Tesla to cut staff by 9 percent in drive for profitability

Share

The cuts to be announced this week will primarily affect salaried workers and include no production associates, which Musk said ensures Tesla's ability to achieve Model 3 targets.

Tesla Inc is cutting several thousand jobs across the company as it seeks to reduce costs and become sustainably profitable without endangering the critical ramp up of production of its Model 3 saloon.

The company did not say how much money the cuts would save. Bloomberg reported the news, and CEO Elon Musk then shared his memo to Tesla staff on Twitter. Their goal, he continued, is to accelerate the world's transition to sustainable, clean energy, but it's a mission they will never achieve unless Tesla eventually demonstrates it can turn a profit.

Is Tesla heading for trouble?

This latest corporate restructuring doesn't exactly come out of left field as a Tesla spokesperson points out that Musk had expressed intentions on shaking things up during Tesla's first-quarter earnings call.

In the email, he said the cuts are aimed at eliminating duplicate roles and he does not expect them to affect the firm's production ability. Tesla now employs approximately 46,000 workers, with roughly 8,000 positions added since the start of the year, according to CNBC.

Trump, Kim sign agreement to keep momentum of talks going
It's so far unclear whether the USA and North Korea will release some kind of joint statement or agreement following the sit-down. In brief remarks this morning to reporters before their private meeting, Trump said he expected to have a "great discussion".

Tesla's announcement comes a month after Musk announced a restructuring of Tesla's organizational chart. As of Tuesday, Tesla's stock is up more than 40% from the 52-week low it hit back in April. The Associated Press reports the 9 percent amounts to about 3,600 employees.

Musk noted that no production workers would be let go to ensure that Model 3 production would not be affected by the cuts.

While Musk didn't mention how many employees specifically will be let go, Tesla's annual filing from December 2017 showed it had 37,543 full-time employees.

Musk also used the internal missive as an opportunity to announce that Tesla's solar energy sales program with Home Depot stores is ending. For almost all of its history, Tesla has put up losses while investing heavily in technology, manufacturing plants and an extensive car-charging network. "I'm deeply grateful for your many contributions to our mission". Moreover, he said that this round of layoffs is necessary so that "we never have to do this again".

"It is very hard to say goodbye", Musk said in the letter.

Share