Published: Thu, June 14, 2018
Economy | By Shawn Conner

Tesla to lay off 9% of workers as part of restructuring plan

Tesla to lay off 9% of workers as part of restructuring plan

Tesla has been under increasing pressure in recent months over its slow rollout of the Model 3 - which is meant to be Tesla's mainstream market offering.

Tesla has announced it is cutting 9% of staff, risking 4,000 jobs worldwide, in a move created to improve profitability.

Tesla is slashing thousands of jobs, its chief executive Elon Musk announced Tuesday, as the electronic auto company attempts to hit production targets and reach profitability. Musk said the decision was made as the automaker works to become profitable.

But after many years of negative financial results, Musk in April predicted the company will be profitable in the second half of this year.

He said that the job cuts were nearly entirely made from the ranks of salaried employees, and that no production associates were included, "so this will not affect our ability to reach Model 3 production targets in the coming months". He said Tesla's rapid growth in recent years led to duplicated roles and jobs the company could no longer justify.

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While confirming that no factory or production employees would be cut, the company did not clarify how much the move would save.

Tesla said after the cuts it would still have more employees than it had at the beginning of 2018.

Tesla is cutting around nine percent of its workforce as part of "restructuring" moves to reduce costs - but company founder Elon Musk has insisted the move will not affect its ability to reach Model 3 production targets.

Musk says the company is motivated by turning a profit.

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.

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Shares of heavily shorted companies can at times get pushed higher as traders rush to buy stock to cover their short bets, triggering what is known as a 'short squeeze.' That has not happened so far for Tesla, according to S3 data.

The biggest job cut in Tesla's 15-year history underscores the pressure Musk is under to stop burning through money - and start making some. The company said the firings involved non-manufacturing positions and were unrelated to production delays involving the Model 3.

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"Difficult, but necessary Tesla reorg underway", CEO Elon Musk wrote on Twitter. Those who are being let go are being informed of the change this week, we're told, and will be offered salary and stock options based on how long they were with the company.

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