Tesla laying off 9 percent of workforce

Gladys Abbott
June 13, 2018

The billionaire Chief Executive said that the cuts were part of a simplification of Tesla's management structure promised last month.

Last month, Tesla CEO Elon Musk announced a vague plan to "restructure" the company in order to achieve profitability during the second half of the year.

Tesla confirmed that only salaried employees will be laid off and no production associate will be let go as Tesla is still focused on increasing Model 3 production.

It goes on: "As part of his effort, and the need to reduce costs and become profitable, we have made the hard decision to let go of approximately 9% of our colleagues across the company". Each time, after a few quarters of small profits, Tesla would ramp up production of another vehicle model-first the Model X, then the Model 3-and rack up more big losses, as this chart from Bloomberg shows.

Tesla employed more than 37,000 people at the end of past year.

Shares rose as much as 7 percent and were last up 3.6 percent at $344.18.

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"Our checks with sales centers indicate Model 3 deliveries are tracking [about] 50% higher than our prior estimates for the quarter, prompting us to raise our estimates", Erikson said in a note, according to CNBC.

Tesla will provide "significant" salary and vesting stock to employees being dismissed, Musk said. Year-to-date, Tesla's headcount is up roughly 15%.

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 Tesla-branded kiosks were created to educate consumers and ultimately generate sales of its residential rooftop solar panels and Powerwall, a battery it designed for homes that store the energy generated by solar panels. The company would seek to reemploy Tesla employees at Home Depot stores at its own locations.

Model 3 production has been viewed as a critical bellwether of Tesla's near-term profitability. "I'm deeply grateful for your many contributions to our mission". Moreover, he said that this round of layoffs is necessary so that "we never have to do this again".

Together, the Buffalo plant has more than 500 workers, Tesla has said.

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