Published: Tue, June 12, 2018
Markets | By Otis Pena

Tesla undecimates its workforce but Elon insists everything's absolutely fine

Tesla undecimates its workforce but Elon insists everything's absolutely fine

"We made these decisions by evaluating the criticality of each position, whether certain jobs could be done more efficiently and productively, and by assessing the specific skills and abilities of each individual in the company", Tesla CEO Elon Musk wrote to employees in an email obtained by TechCrunch.

Musk told employees in May that the company was undergoing a "thorough reorganization" as it contends with production problems, senior staff departures and recent crashes involving its electric cars. He argued that cost cutting was necessary to turn Tesla into a sustainably profitable company.

Tesla would not say how much money the layoffs would save, but said no factory workers would be affected as the company continues to ramp up production of its lower-priced Model 3 compact auto.

Tesla didn't give an exact figure for the number of layoffs.

Tesla said the more than 3,000 cuts would affect mostly salaried employees, excluding workers producing its cars.

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In October, Tesla fired "hundreds of workers" following annual performance reviews. A majority of Tesla employees working at Home Depot will get offers to work in Tesla's own stores.

It wasn't clear what would be the result of "flattening the management structure", but layoffs were expected to be part of the plan.

"Given that Tesla has never made an annual profit in the nearly 15 years since we have existed, profit is obviously not what motivates us", he wrote in an email to employees and posted on Twitter. Musk also has talked about a restructuring of its production line, after failing to meet Model 3 goals. We'd expect any startup in a capital-intensive business to post significant losses as it scales up. However, the analyst still thought the longer-term debate on the merits of the stock is more neutral.

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

Tesla said it plans to cut 9% of its workforce as part of a restructuring meant to reduce costs and boost profitability.

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