Tesla to layoff 9 percent of workforce

Tesla is cutting 9pc of jobs as chief executive Elon Musk seeks profitability

Tesla is cutting 9pc of jobs as chief executive Elon Musk seeks profitability. Credit Reuters

The move coincided with a significant jump in Tesla's stock price following a report from Keybanc Capital Markets that it increased its second-quarter production outlook for the Model 3 by 50 percent.

In a company-wide email, chief executive Elon Musk described the decision as "restructuring" and said it would affect only salaried employees - not the factory workers building its next fleet of Model 3 electric cars.

While that email was sent only to employees, Musk then tweeted the full text immediately afterwards and it is clear that the missive was created to be read by external critics and anxious investors.

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The move - the biggest widespread layoff in Tesla's 15-year history - will nearly entirely involve salaried employees and comes as the carmaker races to hit production targets for its critical Model 3 sedan. Year-to-date, Tesla's headcount is up roughly 15%.

The company is making the move now so it never has to do it again, he wrote. Tesla will, however, continue to take on new staff, as a "significant need for additional production personnel" remains within the company.

Tesla earlier failed to reach a number of key benchmarks for Model 3, leaving Wall Street analysts concerned that Tesla would not reach its goals. The Associated Press reports the 9 percent amounts to about 3,600 employees. He argued that cost cutting was necessary to turn Tesla into a sustainably profitable company.

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The company said it began this year with about 37,000 workers, and has added several thousand. The CEO wrote that those Tesla employees working in Home Depot locations would be offered the chance to work at its own stores.

As part of its reorganization, Tesla is ending its solar panel sales agreement with Home Depot (HD). "It is very hard to say goodbye".

To those who are departing, thank you for everything you've done for Tesla and we wish you well in your future opportunities.

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We are a small company in one of the toughest and most competitive industries on Earth, where just staying alive, let alone growing, is a form of victory (Tesla and Ford remain the only American auto companies who haven't gone bankrupt).

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