Seeking turnaround, Tesla planning to cut workforce by 9%
Layoffs come as pressure to profit grows with Model 3 setbacks
SAN FRANCISCO— Elon Musk is cutting 9 per cent of the workforce at Tesla Inc., a turnabout that underscores the mounting pressure he is under to show the electric-car maker can one day turn a profit.
The move — the biggest widespread layoff in Tesla’s 15-year history — will almost entirely involve salaried employees and comes as the car-maker races to hit production targets for its critical Model 3 sedan.
Musk, 46, has said Tesla is on the cusp of making money by turning a corner with the Model 3. Hyped by the CEO as his most affordable electric car when production began almost a year ago, the company has repeatedly missed manufacturing targets, contributing to billions of dollars in ongoing losses and cash burned.
“Given that Tesla has never made an annual profit in the almost 15 years since we have existed, profit is obviously not what motivates us,” Musk wrote in an internal email Tuesday. “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. That is a valid and fair criticism of Tesla’s history to date.”
No production associates are included in the cuts, Musk wrote. He said Tesla’s rapid growth contributed to the duplication of roles and creation of jobs that the company could no longer justify. Tesla ended last year with 37,543 employees, more than 12 times its head count five years earlier.
In addition to the restructuring, Tesla won’t renew a residential sales agreement with Home Depot Inc., focusing instead on selling solar power in its own stores and online, Musk wrote. His company began to roll out Tesla-branded selling spaces at 800 Home Depot locations earlier this year, build- ing on a previous relationship the retailer had with SolarCity Corp., which Tesla acquired in 2016. Read more on the end to Home Depot solar sales buried in Musk’s memo
Tesla will provide “significant” salary and vesting stock to employees being dismissed, Musk said.
“I would like to thank everyone who is departing Tesla for their hard work over the years,” he wrote. “I’m deeply grateful for your many contributions to our mission. It is very difficult to say goodbye.”
“We will never achieve (our) mission unless we eventually demonstrate that we can be sustainably profitable.” ELON MUSK TESLA CEO