Tesla to Cut 9% of Workers Across Company

Marco Green
June 12, 2018

Tesla will lay off almost one in 10 of its workers but the cuts won't hamper its drive to meet production targets for the Model 3 sedan, according to company CEO Elon Musk.

Tesla's announcement comes a month after Musk announced a restructuring of Tesla's organizational chart.

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

Musk in the email thanked the employees leaving the company and said the individuals will receive compensation.

"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.

Last week, Musk overcame an attempt to strip him of his role as chairman of Tesla's board, a plan introduced by a company shareholder who raised doubts about Musk's ability to manage multiple companies simultaneously. Year-to-date, Tesla's headcount is up roughly 15%.

The San Jose Mercury News, which first reported the firings, said the departures included "engineers, managers and factory workers". "What drives us is our mission to accelerate the world's transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable". I also want to emphasize that we are making this hard decision now so that we never have to do this again.

As many as 9% of Tesla's workforce will be let go.

It will instead "focus our efforts on selling solar power in Tesla stores and online", he said. Each time, after a few quarters of small profits, Tesla would ramp up production of another vehicle model-first the Model X, then the Model 3-and rack up more big losses, as this chart from Bloomberg shows.

Tesla shares rose 2.5 percent to $340.34 in afternoon trading, after reaching as high as $354.97 around noon. It can easily top $50,000 with options.

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