Tesla to cut staff by 9 percent in drive for profitability


Tesla to cut staff by 9 percent in drive for profitability

Tesla is cutting 9% of its workers as part of a reorganization created to reduce costs and help the electric automaker become profitable, according to an email CEO Elon Musk sent to employees Tuesday and obtained by Fortune. At the time, Tesla had 33,000 employees, suggesting that Tesla's headcount is still on an upward trajectory overall.

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 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 lower-priced Model 3 compact vehicle.

Tesla said it started this year with about 37,000 workers, and increased that number by about 15 percent, which would make for a workforce of about 42,550.

Musk said that Tesla would provide laid off workers with "significant salary and stock vesting".

Paris on lockdown as 'armed man takes hostages'
The man reportedly asked to speak to the Iranian embassy to deliver a message to the French government, Reuters reports . Emergency services arrive at the scene of a hostage situation in central France on Tuesday, June 12, 2018.

To ensure that Tesla is well prepared for the future, we have been undertaking a thorough reorganization of our company. Instead, he said that the cuts were made to job functions that, "are hard to justify today".

Musk said that the layoffs do not affect production staff and stressed that this wouldn't hurt the company's efforts to hit big targets for production of the Model 3 sedan.

Tesla employees based at US DIY chain Home Depot and involved with the home solar business Tesla acquired when it bought SolarCity are among those affected, he said. The firm has a sector weight rating and a $300 "fair value" price target on Tesla shares, which were up about 4% in pre-market trade Tuesday.

The company is making the move now so it never has to do it again, he wrote. 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).

Latest News