Tesla to lay off 9% of workers as part of restructuring plan

Ivan Schwartz
June 13, 2018

The billionaire Chief Executive said that the cuts were part of a simplification of Tesla's management structure promised last month.

The job cuts were focused on Tesla's salaried staff and did not include production workers, which Musk said would not affect the company's push to ramp up production of its less expensive Model 3 electric vehicle, with a goal of producing 5,000 cars a week by the end of June.

Elon Musk, Tesla's chairman, said on Twitter that the job cuts were "difficult, but necessary". A spokesman said it would reduce overall employment back to around 37,000 - roughly in line with numbers at the end of previous year.

Up almost 7 percent earlier on Tuesday, shares of the company trimmed gains to stand 3.5 percent higher at $344 by early afternoon.

At the start of April, the company's shares had fallen by around 35 percent from a peak hit last September but signs that it is on course to meet an output target of Model 3 cars have wiped out nearly all of this year's losses.

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Musk said the company was notifying affected employees this week.

"Profit is obviously not what motivates us", Musk wrote. According to Bloomberg, this is the largest layoff in Tesla's 15-year history.

As part of its reorganization, Tesla is ending its solar panel sales agreement with Home Depot (HD).

In the latest quarter, Tesla reported a record loss of $709.6 million (£522m), or $4.19 (£3) per share, for the first quarter ended March 31, compared with a loss of $330.3 million (£243m), or $2.04 (£1.50) per share, a year earlier. That makes these layoffs much more significant than the hundreds of workers Tesla fired last fall.

Musk wrote in the email that the company will never achieve its mission to help move the world to cleaner energy "unless we eventually demonstrate that we can be sustainably profitable". He thanked departing employees for their hard work and said Tesla is providing "significant salary and stock vesting" to those being let go, based on their length of service. Musk said Tesla is making the move now so it never has to do it again. Most employees assigned to Home Depot positions will have the option to move to Tesla's retail stores, says Musk.

Other reports by GizPress

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