Published: Tue, June 12, 2018
Finance | By Loren Pratt

Tesla layoffs: Elon Musk says job cuts required to fuel profits

Tesla layoffs: Elon Musk says job cuts required to fuel profits

But Tesla had 37,543 full-time employees at the start of the year and has hired more since then.

Elon Musk is cutting 9 per cent of the workforce at Tesla Inc., a turnabout that underscores the mounting pressure he is under to show the electric-car maker can one day turn a profit.

Musk says Tesla is making the move now so it never has to do it again.

Tesla shares, which are up almost 10 percent on the year, rose on news of the job cuts. Each time, after a few quarters of small profits, Tesla would ramp up production of another auto model-first the Model X, then the Model 3-and rack up more big losses, as this chart from Bloomberg shows.

"Tesla has grown and evolved rapidly over the past several years, which has resulted in some duplication of roles and some job functions that, while they made sense in the past, are hard to justify today", Musk wrote.

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".

Tesla's announcement comes a month after Musk announced a restructuring of Tesla's organizational chart.

Home Depot's relationship with Tesla will continue through the end of the year, and the company "plans to continue offering solar options to our customers", according to an emailed statement from Steve Holmes, a spokesman for the retailer. Musk said the decision was made as the automaker works to become profitable. For almost all of its history, Tesla has put up losses while investing heavily in technology, manufacturing plants and an extensive car-charging network.

The delays and higher costs have put Tesla into unsafe territory where it is rapidly running out of cash and investors have become nervous about lending the company more money.

It means that Tesla could let go over 3,000 employees in this round of layoffs.

Musk said the cutbacks would not affect the company's ability to reach Model 3 production targets in the coming months.

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