Tesla to dismiss 9 percent of its workforce for profitability

CEO cites necessary 'organizational restructuring' as reason for layoffs

In what he called a "difficult, but necessary" reorganization, Tesla CEO Elon Musk announced Tuesday morning on his Twitter account that the company plans to cut 9 percent of its salaried employees from the Palo Alto-based company, excluding production associates from its Fremont factory.

In an email that he had previously sent company employees and later posted on his personal Twitter account, Musk said that a need to cut duplicate roles and "job functions that, while they made sense in the past, are difficult to justify today" brought upon the major layoffs.

According to Electrek, a news organization covering electric transportation, 3,000 of the company's 30,000 employees will be let go and will be informed this week. The layoffs won't affect the manufacturing line at the company's Fremont auto plant in order to complete production targets for Tesla's new Model 3. The San Francisco Business Times listed Tesla as the largest manufacturer in the Bay Area with about 10,000 employees at its Fremont factory.

Only salaried employees across various departments will be let go, according to Musk's tweet sent Tuesday.

Some employees have already been told that they were laid off Monday and Tuesday, Electrek reported.

After almost 15 years of having never achieved annual profit, Musk announced last month in an email to employees that the company plans on "flattening management structure" and to "trim activities that are not vital to the success of our (Tesla's) mission" in search for profitability in the second half of the year, according to CNBC.

In an apparent extension of these goals, Musk cited the necessity to reduce costs and post profit as a primary reason for the major layoffs. He also expressed that the electric carmaker is not driven by profit but will need to "eventually demonstrate that we can be sustainably profitable" in his tweet Tuesday.

In the last three years, the company has suffered large deficits, losing $2 billion in 2017, $657 million in 2016 and $889 million in 2015, according to CNBC. In the first quarter of 2018, Tesla reported losses of $784.6 million, but also reported record revenues. The company's shares were last up 3.2 percent at $342.77.

Musk also announced in his tweet that the company will discontinue its residential sales agreement with Home Depot and refocus efforts to sell solar power through Tesla online and in stores. Tesla representatives working at Home Depot will be offered jobs at Tesla's retail locations.


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