Tesla cuts 9% of its workers in profit push

Electric car maker Tesla Inc is cutting several thousand jobs across the company as it seeks to reduce costs and become profitable without endangering the critical production ramp-up for its Model 3 sedan.

In an email he said had been sent to staff, billionaire chief executive Elon Musk said on Tuesday that the cuts were part of a simplification of Tesla’s management structure promised last month. “As part of this effort, and the need to reduce costs and become profitable, we have made the difficult decision to let go of approximately 9 per cent of our colleagues,” the email read. “These cuts were almost entirely made from our salaried population and no production associates were included.”

Tesla has been trying to hit a 5,000 per week production target of its Model 3 sedans after facing initial production hiccups. Last week, Musk said the carmaker should achieve its target by the end of June.

The layoffs mean there likely will not be more job cuts in the near-term, said Efraim Levy, analyst at CFRA Research, adding that Tesla will likely raise capital early in 2019.

“I don’t think if Tesla becomes profitable in the third or fourth quarter, that will be sustainable because of ramping up of the production. The layoffs may help them to achieve profitability in the near-term but not sustain it.” Tesla has been burning through cash as it continues to spend on its assembly line and prepares for new investments on projects such as the Model Y crossover and its Gigafactory.