Tesla to cut 9% of staff as Elon Musk's electric car company seeks profitability

Tesla is slashing thousands of jobs, its chief executive, Elon Musk, announced Tuesday, as the electronic car company attempts to hit production targets and reach profitability.

Musk called the job cuts, which will affect about 9% of the company’s more than 40,000 employees, “difficult, but necessary” in a tweet that contained the email he had sent to employees announcing the layoffs.

“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,” the billionaire entrepreneur wrote in the email.

The job cuts will be centered on salaried employees, not factory workers, Musk said, writing, “This will not affect our ability to reach Model 3 production targets in the coming months.”

Tesla has been under intense pressure to prove that it can achieve mass production of the Model 3, its first mass market vehicle. The company has yet to reach Musk’s goal of producing 5,000 cars a week – originally promised for the end of 2017.

At Tesla’s annual shareholder meeting on 5 June, Musk said he believed the company would hit the 5,000 cars-a-week goal by the end of June, and that he thought the company could be profitable later this year.

Tesla has grown rapidly, increasing headcount by more than 15% since the start of the year, according to a company spokesman, so the cuts will leave the headcount higher than it was at the beginning of the year. According to Bloomberg, this is the largest layoff in Tesla’s 15-year history. Musk cast the layoffs as part of a “comprehensive organizational restructuring”, one goal of which is to “flatten our management structure to help us communicate better, eliminate bureaucracy and move faster”.

The company has also faced a significant exodus of executives in recent months, including its head

of “autopilot” hardware engineering, its president of global sales of services and its director of manufacturing engineering.

“To be clear, Tesla will still continue to hire outstanding talent in critical roles as we move forward and there is still a significant need for additional production personnel,” Musk wrote. “I also want to emphasize that we are making this hard decision now so that we never have to do this again.”