Tesla to cut 9% of workforce as part of restructuring to become profitable

Tesla is cutting around 9% 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 confirmed the job cuts on social media after an internal email became public. The company has yet to make a profit since it was founded by the entrepreneur in 2003, and Musk said following a “comprehensible organizational restructuring".

Tesla is understood to have had around 37,500 employees at the end of last year, with CNBC reporting it has added 8000 since the start of 2018. That would mean around 4000 jobs will be lost in the restructuring.

He added: “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 difficult to justify today.

“As part of this effort, and the need to reduce costs and become profitable, we have made the difficult decision to let go of approximately 9% of our colleagues across the company. These cuts were almost entirely made from our salaried population and no production associated were included, so this will not affect our ability to reach Model 3 production targets in the coming months.”

The firm has missed a series of its own production targets for the large volume Model 3 in recent months, citing production issues at its factory. Musk also recently had a tense exchange with financial analysts after the firm reported record losses.

Musk claimed the profit has never been Tesla’s motivation, adding: “What drives us is our mission to accelerate the world’s transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable. That is a valid and fair criticism of Tesla’s history to date.”

Musk added that the employees affected would be notified this week, and that Tesla is also continuing to flatten its management structure to “help us communicate better, eliminate bureaucracy and move faster.” He added that laid off employees would received “significant” salary payments and stock in Tesla.

Noting that a “difficult job” remains ahead, Musk added: “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.

“Despite our tiny size, Tesla has already played a major role in moving the auto industry towards sustainable electric transport and moving the energy industry towards sustainable power generation and storage.”

Despite the struggle to become profitable, Tesla has continued to push ahead, with Musk announcing a string of new models in recent months, including a new Roadster, performance versions of the Model 3 and a compact hatchback.