Markets

Tesla to Cut 9% of Workers Across Company

Tesla to Cut 9% of Workers Across Company

While that email was sent only to employees, Musk then tweeted the full text immediately afterwards and it is clear that the missive was created to be read by external critics and anxious investors.

Tesla announced Tuesday it planned to lay off up to nine percent of its workforce, a move that could eliminate thousands of its roughly 40,000 employees.

Musk, 46, has said Tesla is on the cusp of making money by turning a corner with the Model 3. The areas were to be outfitted during the first half of this year and staffed by Tesla employees to demonstrate that its panels and batteries have mainstream appeal. Each time, after a few quarters of small profits, Tesla would ramp up production of another auto model-first the Model X, then the Model 3-and rack up more big losses, as this chart from Bloomberg shows.

The cutbacks come at a time when Chief Executive Elon Musk has said Tesla would be profitable in the third and fourth quarters.




Tesla said it began notifying impacted workers on Tuesday and would continue to do so throughout the week.

"Given that Tesla has never made an annual profit in the nearly 15 years since we have existed, profit is obviously not what motivates us", he wrote in an email to employees and posted on Twitter. For almost all of its history, Tesla has put up losses while investing heavily in technology, manufacturing plants and an extensive car-charging network. Moreover, he said that this round of layoffs is necessary so that "we never have to do this again".

In addition to this company-wide restructuring, we've decided not to renew our residential sales agreement with Home Depot in order to focus our efforts on selling solar power in Tesla stores and online.

Consumer Edge Research Analyst James Albertine wrote in a note to investors that he views the moves "as a positive in helping Tesla track toward profitability later this year". The company said the firings involved non-manufacturing positions and were unrelated to production delays involving the Model 3.


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