Economy

Elon Musk says Tesla will cut 9% of its workforce

Elon Musk says Tesla will cut 9% of its workforce

Cuts will not affect factory workers and "production associates" crucial to manufacturing the Model 3 and Tesla's hope of turning an annual profit for the first time in 2018.

Afterward an emotional Musk appeared to signal brighter days ahead for the Tesla when he predicted the company would begin pushing out 5,000 Model 3s per week by the end of June.

Musk's statement addressed the fact that Tesla "has never made a profit in the nearly 15 years" since the company was founded, but highlighted that, along with Ford, it is the only United States vehicle company to never have been declared bankrupt.

Is Tesla heading for trouble?

"It is clear that Tesla is under tremendous pressure to finally turn a profit and is attempting to address it by cutting overhead", Michelle Krebs, executive analyst for Autotrader, said in an emailed statement.

In the email, he said the cuts are aimed at eliminating duplicate roles and he does not expect them to affect the firm's production ability. Tesla also evaluated each workers' "specific skills and abilities" as part of its restructuring effort.

Musk told employees in May that the company was undergoing a "thorough reorganisation" as it contends with production problems, senior staff departures and recent crashes involving its electric cars.

Elon Musk
Tesla is shedding 9% of its workforce Musk said the moves would help the company become profitable Close

Musk also used the internal missive as an opportunity to announce that Tesla's solar energy sales program with Home Depot stores is ending.

Shares in the company rose as much as 7 per cent on Tuesday, although they fell back to stand just 3 per cent higher on the day after Musk's announcement.

It will help the electric carmaker reduce costs without endangering the critical ramp up of production of its Model 3 sedan.

"That is a valid and fair criticism of Tesla's history to date", Musk said. The CEO wrote that those Tesla employees working in Home Depot locations would be offered the chance to work at its own stores. "I'm deeply grateful for your many contributions to our mission".

Musk says Tesla is making the move now so it never has to do it again. "It is very hard to say goodbye".

What do you think the future holds for Tesla?

More news: Apple Bans Cryptocurrency Mining Apps on iOS Devices