Tesla cuts 9pc of work­force in bid to post a profit

The Myanmar Times - - International Business -

ELEC­TRIC car maker Tesla Inc. is lay­ing off about 3,600 work­ers mainly from its salaried ranks as it slashes costs in an ef­fort to de­liver on CEO Elon Musk’s prom­ise to turn a profit in the sec­ond half of the year.

In an email to work­ers on Tues­day, Musk said the cuts amount to about 9 per­cent of the com­pany’s work­force of 40,000.

Tesla would not say how much money the lay­offs would save, but said no fac­tory work­ers would be af­fected as the com­pany con­tin­ues to ramp up pro­duc­tion of its low­er­priced Model 3 com­pact car.

The move is part of an or­ga­ni­za­tional re­struc­tur­ing that Musk an­nounced ear­lier in the year.

“Tesla has grown and evolved rapidly over the past sev­eral years, which has re­sulted in some du­pli­ca­tion of roles and some job func­tions that, while they made sense in the past, are dif­fi­cult to jus­tify to­day,” Musk wrote in the email. 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.

Tesla has not made an an­nual profit in its 15 years of do­ing busi­ness, and it has posted only two quar­terly net prof­its.

At the com­pany’s an­nual share­holder meet­ing ear­lier this month, Musk said he ex­pected the Palo Alto, Cal­i­for­nia, com­pany to post a quar­terly profit dur­ing the July-Septem­ber pe­riod. For nearly all of its his­tory, Tesla has put up losses while in­vest­ing heav­ily in tech­nol­ogy, manufacturing plants and an ex­ten­sive car-charg­ing net­work.

It’s not the first time Tesla has laid off work­ers. The com­pany let go of 400 to 700 work­ers last fall af­ter com­plet­ing an­nual per­for­mance re­views, and it laid off a small num­ber of work­ers back in 2008.

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.”

The com­pany is mak­ing the move now so it never has to do it again, he wrote. Tesla still has a sig­nif­i­cant need for pro­duc­tion work­ers as it tries to reach Model 3 manufacturing tar­gets, he wrote in the email.

The lay­offs come in en­gi­neer­ing, sales and other front-of­fice func­tions, but the com­pany says the re­main­ing work­force is large enough to ac­com­plish Musk’s lofty goals of rolling out a semi, pickup truck and a new SUV in the com­ing years.

Tesla shares rose 2.5 per­cent to $340.34 in af­ter­noon trad­ing, af­ter reach­ing as high as $354.97 around noon.

Musk also an­nounced that the com­pany’s so­lar panel unit has de­cided to end its agree­ment to sell via Home De­pot stores so it can fo­cus on sales in Tesla’s com­pany stores and on­line. A ma­jor­ity of Tesla em­ploy­ees work­ing at Home De­pot will get of­fers to work in Tesla’s own stores.

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.”

He wrote that reach­ing Musk’s Model 3 pro­duc­tion goal of 5,000 ve­hi­cles per week by the end of June is still the pri­mary driver of prof­itabil­ity. “A fo­cus on ‘get­ting lean’ is a pos­i­tive with re­spect to Tesla’s guid­ance for achiev­ing con­sol­i­dated prof­itabil­ity in 2018, in our view,” he wrote.

The Model 3 starts at $35,000, but lower-priced con­fig­u­ra­tions are not avail­able yet. It can eas­ily top $50,000 with op­tions. – AP

Photo: AP

Elec­tric car maker Tesla Inc. is lay­ing off about 3,600 work­ers.

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